I am really going to drop it after this, partly because we have devolved into metal chair bashing, and partly because I plan on doing some technical papers while at Texas Tech, and Scott may be one of the few bloggers who appreciates them…
Anyway, in this post Scott first lectures me on how the EMH is falsifiable. Right, I know the academic EMH in the journal articles was falsifiable. What I claimed in my post is that in practice it is non-falsifiable.
What do I mean? Check out this screenshot, showing the comments under Scott’s post:
THAT is what I mean when I say in practice, the EMH is non-falsifiable. We could have the stock market drop 40% in a year, have major investment banks fail, and enter the worst world economy since the Great Depression…and still Scott would be high-fiving his audience when they say, in a Joe Pesci voice, “What? Where’s the problem? Minga, you Austrians act like the market did something.”
(And actually, why does the Great Depression get such a bad rap? I mean, humans went to the moon afterwards. How bad could it have been?)
If you want to believe in the EMH, I’m fine with that. But don’t think it keeps passing empirical tests with flying colors, if you’re using it the way most people on the internet are (including Fama).