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A note comprising a negative resolution of the Efficient Market Hypothesis

Robert Viragh

2010 · arXiv

Statistics & probabilityEconomics
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This note comprises a negative resolution of the Efficient Market Hypothesis.

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viraghrr
Recommendation · rule
I'm a crank. I found this article very valuable. In 2010 I put online a brief refutation of the EMH, the efficient market hypothesis. Here it is: https://arxiv.org/abs/1011.0423 If I had seen this then, I think I would have followed the directions in the inset box, where the article suggests saying something like: "The reason I succeeded in finding an algorithm for P=NP is that I noticed that... No one else seems to see that this insight is very powerful. It is very useful since it implies ..." I could have simply written: "Nobody has bothered to test the Efficient Market Hypothesis, but since I have some background in computer science I made an unusual mental connection,…
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and it follows that it doesn't need to be tested. It cannot be true." (My proof outlined a way to show it has to be false.) I remember my thinking at the time was that I didn't need to explain it at all, just make it correct and brief. At the time, I didn't want to include anything personal in the paper. Perhaps I should have. It's not a very good paper.
Original comment P = NP Proofs: Advice to claimers
fdsakjfsdfj
Neutral mention · rule
It might interest some people here to know that if the EMH were true, you could use it to break unbreakable cryptography. However that's not what would happen. If you tried it, your crack would fail, and you would just end up proving experimentally that EMH isn't true. That would move the discussion to "is it true except if you test it in weird experiments though?" which is not an interesting point of debate: Obviously there are no market participants with infinite wisdom and processing ability who know all public news and factor it into every stock's price instantly at all times, and are perfect in their analysis. And have been since the dawn of markets, even before the Internet. it's totally obvious. Anyway here is a protocol you can use to demonstrate EMH is false, any time you want: https://arxiv.org/abs/1011.0423
Original comment Kindly Stop Saying the Efficient Market Hypothesis Is Dead
viraghr
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Have another account here but don't want to take the karma hit for being a crank. I published this 2-page proof that the EMH is false: https://arxiv.org/abs/1011.0423 (didn't set the date so in the document it's wrong, this was published 2010.) It doesn't depend on P = NP, it's simply a rigorous proof that EMH is false. Let's switch gears a second. Here's a famous elementary proof[1] that there are infinite primes. Suppose there are just finite primes, up to some largest. Multiply them together and add one. No prime divides the new number (because "every" prime leaves a remainder 1), so you've just produced a new prime. This new prime is larger than the largest prime in…
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your finite set because you multiplied that by the rest of them and added one to get it. So this is a contradiction, you couldn't have had finite primes up to some largest. Anyway if you think there might be a largest prime after what you just read, it just means you don't understand the proof. If you believe EMH might be true it just means you don't understand the proof that it is false. Of course, nobody ever even hypothesized that academia was efficient :) [1] https://en.wikipedia.org/wiki/Euclid%27s_theorem#Euclid's_pr... -- EDIT: no mistake in my comment
Original comment Markets are efficient if and only if P = NP (2010)

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