Fama – Sound Economics

Nobel Su-Prize

Posted on November 7, 2013 by Matthew Moreno — No Comments ↓

Compared to other fields, economics certainly has its fair share of controversy, and maybe a little bit more. As a fledgling freshman in Econ 170, I am surprised by how many statements my professor prefaces with the disclaimer “most economists would agree that…”. On the political stage, consensus on what should seem general economic “fact”–budget figures, growth rates, etc.—often seems fleeting at best and nonexistent at worst. While dissension doubtlessly underlies any healthy debate, quarrelsomeness and vehemence can detract. Proper balance between controversy and courtesy lays the foundation for a more fruitful dialogue. An article from the NPR Planet Money blog about Continue reading Nobel Su-Prize→

A Possible Improvement on the Efficient Market Hypothesis

Posted on November 6, 2013 by Nicholas Coffin — No Comments ↓

This year Eugene Fama won the nobel prize in Economics for his work on the Efficient Market Hypothesis (EMH). The idea behind his work is that it is impossible to “beat” the market, because all information about a given stock is available to everyone. That is, the EMH assumes that a stock valued at $60 is in fact worth $60: it is impossible to purchase an undervalued stock. The only way one could potentially make higher returns than the average, then, is to engage in riskier trading where bigger payoffs are possible. Investopedia offers a neat little video overview of Continue reading A Possible Improvement on the Efficient Market Hypothesis→