Yet reading Mr Bearbull's column this week, I felt compelled to comment. He concludes that the one thing we should take from the theory is that we cannot predict the future of asset prices. With that I can't disagree. But I can't help but remember that this is the same Mr Bearbull who spends hours building spreadsheets attempting to do just that (or at least give himself some directional clues).
As you will remember, the last time Mr Bearbull conducted such an exercise it involved a company at the smaller end of the market - and, as Stephen Wilmot points out, this is exactly where Mr Fama and EMH devotees admit that the theory falls down. It's also exactly where our stock-picking maestro Simon Thompson comes into his own - he'll spend hours poring over small company accounts trying to spot those valuation anomalies that occur precisely because such companies don't receive the scrutiny that larger companies receive, and which underpins the principle of EMH. And guess what? Simon's Bargain Shares portfolio is absolutely flying this year, as it has for most of the last decade.
But even at the larger end of the scale efficient market hypothesis appears to fall over. How do you square it with the performance of Neil Woodford's Invesco Perpetual funds, for example, because surely funds of that size cannot beat the market year in year out as they do? Maybe because even if we were to assume that there was a world of perfect information, not all investors are created equal - in other words, they do not have the ability or patience to access or interpret it equally. EMH, on the other hand, suggests there is no room in investing for self-improvement.
What's more, the reality is that in a world where the actions of hundreds of millions of investors influence markets, neither Mr Fama or Mr Shiller's model can explain everything - the so-called 'psychohistory' of author Isaac Asimov's Foundation saga will remain a concept of science fiction for many years to come. And that 's why this time Nobel have got this one right, because there is merit in both ideas. So even if some aspects of EMH hold true, you should never give up on the belief that by seeking out better information - and by becoming a better investor - you can still beat the market.
