Why you can ignore National Review's economics coverage, part 59037534985723493.
Today's numbskull: Thomas Nugent, an investment advisor who says that (surprise!) investment advisors can do better than random at picking stocks.
He's arguing against what economists call the "random walk" hypothesis, the idea that nobody can make money by predicting stock prices. About 95% of the evidence supports the random-walkers, and Yale's Burton Malkiel sums up the idea in plain English here.
The "random walk" hypothesis has another name--the "efficient market" hypothesis. A good wiki summary is here. Again, about 95% of the evidence supports the "efficient market" hypothesis.
It's really not even worth it to argue against this guy Nugent. It's like arguing with the crazy preacher on your college campus or the homeless guy at the bus terminal--words don't mean anything to those people.
Over the long haul, the pros apparently can't do better than random at picking stocks. There are good theoretical reasons for why that's true--and I love talking about those reasons--but for the time being, it's enough to note that Nugent's numbers are rigged like the sails of the U.S.S. Constitution.
*sigh* If their economics is this bad, I wonder if their political coverage is any better....
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Orig. Posted by Garett Jones at 11/12/2005 10:30:00 PM
He's arguing against what economists call the "random walk" hypothesis, the idea that nobody can make money by predicting stock prices. About 95% of the evidence supports the random-walkers, and Yale's Burton Malkiel sums up the idea in plain English here.
The "random walk" hypothesis has another name--the "efficient market" hypothesis. A good wiki summary is here. Again, about 95% of the evidence supports the "efficient market" hypothesis.
It's really not even worth it to argue against this guy Nugent. It's like arguing with the crazy preacher on your college campus or the homeless guy at the bus terminal--words don't mean anything to those people.
Over the long haul, the pros apparently can't do better than random at picking stocks. There are good theoretical reasons for why that's true--and I love talking about those reasons--but for the time being, it's enough to note that Nugent's numbers are rigged like the sails of the U.S.S. Constitution.
*sigh* If their economics is this bad, I wonder if their political coverage is any better....
--
Orig. Posted by Garett Jones at 11/12/2005 10:30:00 PM
posted by TJ Kane at 12:54 PM
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