Watch Outfor Those Fat Tails

摘要

The world of investments is an odd one. Various studies have shown that a monkey throwing darts can outperform most active equity managers, yet mutual funds are still widely distributed and the work of highly respected mathematicians is cited to explain certain investment choices.rnHowever, some theories persist long after, arguably, they have been proven false. One such case is the efficient market theory (EMT), which Wikipedia defined this way: "EMT asserts that financial markets are informationally efficient, or that prices on traded assets, e.g., stocks, bonds, or property, already reflect all known information. The efficient-market hypothesis states that it is impossible to consistently outperform the market by using any information that the market already knows, except through luck."