The Market Is Efficient, Or It Isn't, Wins Nobel Prize

The Nobel Prize in Economic Sciences was awarded today to Eugene Fama, Robert Shiller and Lars Peter Hansen. By now you are aware of Eugene Fama, one of the earliest and most vocal proponents of stock market efficiency. Fama's research centered around testing for market efficiency and attacks on market efficiency. What is interesting about this year's Nobel Prize is that Robert Shiller is a proponent of behavioral finance, arguing that markets are often inefficient. He is known for predicting the housing bubble and has argued that while the stock market may exhibit random price fluctuations in the short term, it is predictable over three to five year periods. As is noted by Nobel Laureate Robert Solow, the award this year is a little like an award to both the Yankees and Red Sox.