The efficient markets hypothesis, or EMH, is the financial equivalent of Monty Python’s dead parrot. No matter how much you point out that it is dead, the believers simply state that it is just resting. In part this is testament to the high degree of inertia that academic theories enjoy. Once a theory has been accepted it seems to take forever to dislodge it. As Max Planck observed: “Science advances one funeral at a time.”

The EMH states that all information is reflected in current prices. It is bad enough that the EMH exists as an academic theory (filling student’s heads with utter garbage) but the very real damage it does comes from the fact that as Keynes opined “practical men are usually the slaves of some defunct economist”. The EMH has left us with a long litany of bad ideas that have influenced the very structure of our industry.