Can You Outperform the Market Despite the Efficient Market Hypothesis? 📈

The Efficient Market Hypothesis (EMH) is one of the cornerstones of modern finance. On paper, it’s quite elegant: prices reflect all available information, markets are efficient, and nobody should be able to consistently “beat” them. But as the likes of Charlie Munger remind us, real markets aren't so simple. In fact, mathematics would suggest that they are chaotic systems, which appear fractal-like, and are mostly unpredictable for that reason.

In this video, we’ll explore three common misunderstandings about the EMH - and why they matter in today’s investment environment. We’ll look at how theory collides with reality, why elegant models sometimes fail, and what Charlie Munger’s wisdom has to say about it.

This video may help you see the Efficient Market Hypothesis in a sharper, more practical light.

Disclaimer:
This video is for educational and entertainment purposes only, and is a personal perspective on market behavior. It is not financial advice, it is not intended to advocate for or against any particular approach to investing, and nothing here should be taken as a recommendation to invest or not invest in any security or fund. Always do your own research or consult a licensed financial advisor if you are looking for advice before making investment decisions.

Charlie Munger comments from "A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business" - talk at USC Business School delivered 1994.

Charlie Munger (and Warren Buffett) comments on the Efficient Market Hypothesis: https://www.youtube.com/watch?v=pjapB0djnTs

Jim Simons picture:
Gleuschk, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0), via Wikimedia Commons

Mandelbrot photo:
Rama, CC BY-SA 2.0 FR (https://creativecommons.org/licenses/by-sa/2.0/fr/deed.en), via Wikimedia Commons

BITCOIN lifetime price chart - Wikipedia

Dot Com bubble chart - Wikipedia

Nassim Nicholas Taleb on Talks at Google
Skin in the Game
https://www.youtube.com/watch?v=uv6KLbkvua8&t=387s

Image of Michael Burry speaking on CBS:
Extra: The $8.4 Billion Bet
https://www.youtube.com/watch?v=6W5zF8Xqro0

Charlie Munger image from 2023 Berkshire Hathaway annual meeting, on CNBC.
https://www.youtube.com/watch?v=Dv97-S9ZL-8&t=10624s
CNBC Television
314K views

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