The government released a list of more than thirteen thousand past and present Madoff account holders, ranging from hundreds of not very rich Florida retirees to celebrities, billionaires, and nonprofits such as charities and universities. If these legions of investors were easily gulled, often for decades, what does this swindle (and others) say about the academic theory that markets are “efficient,” with its claims that investors quickly and rationally incorporate all publicly available information into their selections?
It says that there are always inefficiencies, so the strictest interpretation of the efficient market hypothesis is clearly wrong, but as a model, it's damned accurate.
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Brian
