When I started blogging in early 2009, the anti-EMH forces were riding high.  The previous decade had seen tech and housing “bubbles”, there were studies showing that hedge founds and elite college endowments outperformed the broader markets, there was the absurdly high price of Bitcoins, and there were academic studies finding market “anomalies”.  In the eight years since, all of these arguments have either mostly or entirely collapsed.

1. Remember those people who told you not to buy Bitcoin at $30 because it was a wildly inflated bubble?  They stopped you from becoming filthy rich, as it’s now at over $2400.  Yes, it could collapse by 90%, but it would still be 8 times higher than when anti-EMH pundits were calling it a bubble.  Alternatively, if 98% of Bitcoin-type investments fell in value to zero, it would still be a good idea to invest in all of them as long as one in 50 went from $30 to $2400.  Yes, the anti-EMH argument is that weak—even if they were right 98% of the time on bubbles bursting, they’d be wrong in their broader argument that markets are not efficient.

2.  Hedge funds have done poorly since I started blogging (Buffett won his bet that they would not continue outperforming the S&P500.)  College endowments haven’t even been able to beat index funds.

3.  House prices are back up to the peak, and NASDAQ is almost 24% above the 2000 peak.  In fairness, in both cases the real price remains below peak levels.  But there is no longer a serious argument that these markets were “obviously” ridiculously overvalued, especially given that so many other foreign housing markets are now far above 2006 levels. Back in 2002, when NASDAQ was at roughly 1100, people were claiming that 5000, and even 4000, had been an absurdly overvalued level.  Now it’s over 6200.  And yet most of these pundits seemed to have no problem with a NASDAQ of 1120 in October 2002.  Don’t let anti-EMH people tell you how to invest.

4.  Alex Tabarrok linked to a recent academic study by Kewei Hou, Chen Xue and Lu Zhang, which looked at a large number of market “anomaly” studies, and found that the results were heavily influenced by data mining (aka p-hacking):

The anomalies literature is infested with widespread p-hacking. We replicate the entire anomalies literature in finance and accounting by compiling a largest-to-date data library that contains 447 anomaly variables. With microcaps alleviated via New York Stock Exchange breakpoints and value-weighted returns, 286 anomalies (64%) including 95 out of 102 liquidity variables (93%) are insignificant at the conventional 5% level. Imposing the cutoff t-value of three raises the number of insignificance to 380 (85%). Even for the 161 significant anomalies, their magnitudes are often much lower than originally reported. Out of the 161, the q-factor model leaves 115 alphas insignificant (150 with t < 3). In all, capital markets are more efficient than previously recognized.

In retrospect, 2009 was “peak anti-EMH”, and it’s been all downhill from there.

PS.  Just when you think the GOP and its fake news co-conspirators can’t get any further down into the gutter, they hit a new low.  Remember the saying; “The fish rots from the head down”?  A pro-Trump Republican assaulted a reporter in Montana, while running for Congress.  There was a Fox News reporter standing three feet away.  But during the next few hours, Fox News reported the candidate’s pathetic lie (notice how these bullies don’t even have the courage to stand up for their beliefs?), but failed to report its own reporter’s eyewitness account–which contradicted the candidate.  Perhaps Fox is spending too much time trying to find the real killer of Seth Rich.

And of course GOP politicians just run and hide when asked to comment.

Update:  The editors of Bloomberg want the Bank of Canada to stop trying to stabilize the economy and shift over to trying to control asset prices:

Canada Must Deflate Its Housing Bubble