http://en.wikipedia.org/wiki/Efficient-market_hypothesis
Back in 1987 when I was pursuing my MBA, I was introduced to EMH lectured by Jerome Haas and Harold Bierman. For exam sake to pass the Corporate Finance subject who care what it is all about. Just answer the question you will be given grades. This is the easy part.
Next come Behavioral Decision Theory taught by Richard (Dick) Thaler. Dick who has a PhD Economics "switched" from "fundamental" camp to "behavioral" camp. Dick and his cohorts believe that human behavior dictates decision and choices are never perfect. What that means is MARKET IS NEVER EFFICIENT. IF market is never efficient that means you can exploit such opportunities. Who cares what he thinks! Just remember what he taught in class and go answer the questions in the exam.
By the time I was totally soaked in the financial markets in 1992 onwards, Dick Thaler lectures started to flash in my mind after experiencing series of wild swing. IF market is "very" efficient, why the wild swing? I have done my stereotype fundamental financial analysis....the list is longer than my weekly grocery checklists.
IF the fundamental financial grocery checklist can't explain and pinpoint when this wild swing and why happen, something is just not right! IF YOU HAVE A BIT OF COMMON SENSE TO THINK.
If checklist is fool-proof than there should not be anymore stocks to invest. They should be fully priced! Everyone who follow the check list like Holy Grail should be richer than Buffet. Buffet can make some bad investment following the grocery checklist, a few companies went kaput despite Buffet believing they are "good". Whatever that means! Buffet is no god either!
That started my journey to revolutionize my personal trading-investing-punting-smart calculated gambling technique. Despite the term INVESTMENT coined by the academic which sounds dam blardy noble and high class, it is nothing but another MARKETING GIMMICK. Now the best part is some blardy idiot will come and tell you I am using INVESTMENT TECHNIQUE OR ANALYSIS (aka grocery checklist). Sound so big...sound so great...classic Marketing.
After 20 years enjoying myself in the market and my regular idea exchanges to with the Finance Academic in USA, more and more people in the academic are starting to challenge the old school. But you can't remove the old school completely. Otherwise many people will register for unemployment benefits. Now this is going to dent the improving employment rate in USA.
Let us see over the next 10 years how the dogmatic stereotype live in the financial markets!
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