Are Markets Efficient?


9/08/2016 11:59:34 PM // Written by Phil Stockton

Are Markets Efficient?

Eugene Fama and Richard Thaler, both professors at The University of Chicago Booth School of Business, go head-to-head and debate the question: Are Markets Efficient? The video and transcript can be found at the bottom of this piece.

Fama is best known for the Efficient Market Hypnotises which states that markets are efficient because current prices reflect all available market information.  

Thaler, a renowned behavioural scientist and economist, is less convinced stating that markets can be wrong and that the price is not always correct.

Regardless of which side of the debate you fall, both Fama and Thaler agree that investing is prudent and that saving for your retirement is essential. Richard Thaler favours liberal paternalism when it comes to retirement saving. Thaler believes in mandatory savings for all with saving rates that rise in line with your income.

We couldn’t agree more and support auto-enrolment in national/state retirement schemes. However, we know from experience that many people just do not save enough; this can be for a variety of reasons – some more valid than others.   

Do you save enough to secure the income you want in retirement or do you need a ‘nudge’?

Watch the debate and read the transcript here.  

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