Why Markets Are Efficient

Here’s why I’m learning towards efficient markets.

Following Tim Ferriss’s recommendations, I’ve read, in this order

1. Buffett – The Making of an American Capitalist
2. More Money Than God
3. The Smartest Investment Book You’ll Ever Read

I’ve just finished the third. This book falls under the “efficient market” hypothesis whereas the first two were strong advocates of the “inefficient marts” hypothesis. I have to admit I was pretty convinced by inefficient market theory, but Solin’s book has kind of blown it out of the water.

Anyway – this book is great. Its aggressive tone against what Solin calls “hyperactive” investing and the complete lies of the financial industry make this book mandatory reading for anyone interested in investing, regardless of whether you’re an efficient or inefficient market guy.

If more people read this book, it would make lives harder for unethical brokers pushing unsuitable products with no fiduciary responsibility. And that’s good in my book.

A lot of people don’t really consider critical things such as fees when they’re buying actively managed funds – this book explains in black and white what the dangers are.

Best of all there’s a very simple and clear approach in the final section – the book is not just a rant!

Great stuff.

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