This really puts my mind at ease as far as whether it’s an economically doomed strategy to pursue quantitative finance:

The Efficient Markets Hypothesis is neither necessary nor sufficient for the Random Walk Hypothesis.

Apparently the Cowles Commission was the first to discover a Gaussian pattern in stock market returns—and its members thought it was proof that financial markets are irrational.  Later on, Paul Samuelson established the connection between EMH, greed, arbitrageurs, and random walks of the price of a publicly traded stock.  (Benoit Mandelbrot figures into this story too.)

Anyway, Eugene Fama eventually coined the phrase “Prices fully reflect all available information” which is the story I got in Economics 101.  But like most bite-sized wisdom, apparently it’s more complicated than that.  (Phew, said the hedge fund investor.)

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