In mathematics, risk and uncertainty are different things. Models to predict asset prices treat the uncertainty of investment decisions as if they were quantifiable risks, and hence these models keep making disastrous predictions.
A summary of Lazonick’s work showing how corporate buybacks of shares have artificially inflated share prices, thereby boosting executive pay, while depriving the real economy of funds for investment in productivity.
Huge concentrations of wealth have distorted and destabilised financial markets, which now need to be reformed.
A summary of Pozsar’s conclusions on what we need to do about wealth inequality destabilising our economy.
A summary of this section of the blog.
How the efficient market hypothesis justified deregulation of financial markets, leading the to the extreme chaos, inefficiency and instability we see in these markets today.
Why the Efficient Market Hypothesis is wrong, and therefore why markets always price financial assets incorrectly.
An explanation of the “Efficient Market Hypothesis” – the belief that markets will always price financial assets correctly.
What is the “fundamental value” of a financial asset?