Monday, 20th July 2009
This blog post points out the efficient markts hypothesis can either mean that prices are correct, or that there is no free lunch: that it is not possible to beat the market without taking on extra risk. I am not sure that this is a very scientific distinction, because I do not see how to test the difference.If we do accept that these are the two main variants (I think further subtleties are possible), then, presumably each exists in strong, semi-strong and weak forms (the linked article was updated today to better explain the different variants of EMH), so we have a total of six variants. Test that!