efficient-market hypothesis. The central claim of the theory is that the movement of the stock market is unpredictable to any meaningful extent. Some investors inevitably perform better than others over short periods of time—just as some gamblers inevitably win at roulette on any given evening in Las Vegas. But, Fama claimed, they weren’t able to m

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judgmental adjustments to statistical forecasting methods resulted in forecasts that were about 15 percent more accurate. The idea that a statistical model would be able to “solve” the problem of economic forecasting was somewhat in vogue during the 1970s and 1980s when computers came into wider use. But as was the case in other fields, like earthq

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Economics 101 teaches that trading is rational only when it makes both parties better off. A baseball team with two good shortstops but no pitching trades one of them to a team with plenty of good arms but a shortstop who’s batting .190. Or an investor who is getting ready to retire cashes out her stocks and trades them to another investor who is j

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