Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at twitter.com/CharlesRAAII.
Philip Tetlock is the Annenberg University Professor at the University of Pennsylvania and co-author with Dan Gardner of “Superforecasting: The Art and Science of Prediction” (Crown Publishers, 2015).


Discussion

Pete Stoehr from NY posted about 1 year ago:

An excellent article. It mentions the efficient market theory in passing. I have always believed this theory to be a fallacy. Tetlock teaches me the technical names to describe why.
Efficient Market Theory is all epistemic, like Einstein. It assumes that each investor, presented with the same facts, will act the same. This ignores the investor's time frame and volatility tolerance (I do not equate volatility and risk. Sorry, Mr. Sharpe.), and other factors including investment style.
A momentum investor and a value investor will make different decisions even when presented with the same facts. Price is set by supply and demand through the auction process. In any auction, the winner "overpays" in the opinion of all other participants. Success is perhaps achieved by overpaying the least when buying. Efficient Market Theory can't handle this.
John Maynard Keynes likened investing to judging a beauty contest, except that the object was not to pick the most beautiful girl, but to pick the one the other judges would choose. Of course they are playing the same game. Again, this argues against efficient markets.
Remember "The race is not always to the swift, nor the battle to the strong, but that's the way to bet."


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