Something looked terribly familiar about the article by Gillian Tett in the Financial Times. It nagged at me for a day until I checked back in my blog archives and found that I’d been thinking along the same lines— that the models we use to understand our business world seem to be broken. That means error: a lack of predictability.
The subject of Ms Tett’s article was a poll among members of Britain’s Chartered Financial Analyst Institute revealing that 77% felt “strongly” or “very strongly” that the markets behaved irrationally rather than in conformity to the “efficient market hypothesis” — the cornerstone of the capital assets pricing model.
Hooray! While in itself disturbing (especially if your investments are determined, in part, through reliance upon this model)– this is an advance BY DISCONFIRMATION OF HYPOTHESIS— in knowledge. And although the idea of irrational markets may be cold comfort for something so predictable, and now lost—- the recognition of not knowing is the hopeful precursor to future knowing.
Here is a truly green shoot!
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