Wall Street

A number of readers have asked me what I think about the Wall Street protests. In general I think public protest is usually a good thing, and I'm pleased to see demonstrations in favor of good things like corporate accountability and against bad things like climate change. I think there are plenty of reasons for political activism in our country, and am always pleased by it. On the other hand, do I think that this is the beginning of something profound and important? I can't say for sure, but I would guess not. Protesting Wall Street isn't a bad idea - but there's a fundamental problem in…

I'm reading Justin Fox's The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street, which is on many "To Read" lists because of its topical relevance. I think it is especially illuminating when examined in light of another work, Toward Rational Exuberance: The Evolution of the Modern Stock Market by B. Mark Smith. As made clear by the title Fox's stance is generally skeptical of the efficient-market hypothesis (though Fox does often distinguish between weak and strong forms of the hypothesis, and is naturally not as hostile to the former as the latter). In…