Send us a textUnlock the mysteries of the capital markets as we navigate the Efficient Markets Hypothesis with compelling insights from from the financial literature. This episode is your golden ticket to understanding why asset prices aren't just a roll of the dice. We're dissecting the bedrock of market behavior, from the long-term accuracy of pricing information to the inevitable influence of uncertainty on capital allocation. Join me, Edward Finley, as we scrutinize the traditional beliefs in market efficiency and invite skepticism into the conversation, revealing how the unpredictability of new information and the human element behind market movements challenge established financial doctrines.Prepare to have your perspective on finance revolutionized as we contrast the trajectories of Amazon and IBM, demystifying the market's heartbeat through the lens of human behavior. The episode sheds light on how even the most rational investors fall prey to cognitive biases, weaving in personal anecdotes and empirical evidence that underscore the powerful sway these biases hold over financial decisions. Our engaging dialogue will be supported by academic studies that peel back the layers of overconfidence, conservatism, and representativeness, offering a fresh narrative understanding that goes beyond the numbers.We wrap up with a potent discussion on the premiums and risks of diverse asset classes, diving into the behavioral finance theories that shape investor behavior in profound and often irrational ways. Unravel the enigma behind the higher historical premiums for small cap and value stocks, and explore the influence of loss aversion on equity risk premiums. As we pave the way for future conversations on the limitations of probability theory in market risk and return, you're left with profound insights into the complexity of financial markets that will keep you ahead of the curve.Notes - https://1drv.ms/p/s!AqjfuX3WVgp8uGqU5kV1Yj937her?e=JXxNWQThanks for listening! Please be sure to review the podcast or send your comments to me by email at [email protected]. And tell your friends!

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