Daily Archives: July 15, 2010

IS THE DIP REAL?

Today’s weekly update on initial jobless claims suggests that the labor market is finally turning (or will soon turn) for the better. Maybe. For the first time in nearly two years, seasonally adjusted new filings for jobless benefits totaled less than 430,000. We’ve seen this movie before only to end up with disappointment, as we’ve been discussing (such as here, for instance). Will it be any different this time? For today, at least, it’s easier to answer “yes.”

Continue reading

THE PARADOX OF DISMISSING MARKET EFFICIENCY

The efficient market hypothesis (EMH) is one of the most contentious topics in all of financial economics. You could spend years reviewing the mountain of literature, both pro and con, that dissects the subject into ever finer slices without reading the same paper twice. As a practical matter, EMH has been helpful for investors, namely, making the case for indexing. Indexing isn’t perfect and some investors can do better, but passive investing has a history of more or less working as advertised: delivering middling performance over time relative to a wide range of actively managed results, and at low cost.

Continue reading