Morning Must-Read: Justin Fox: Are Money Managers Lemmings?

Justin Fox: Are Money Managers Lemmings?: “It was once widely believed that the rise of professional investors would make financial markets less prone to manias, panics and crashes…

…Lately, the opposite belief has begun to take hold…. Bradley Jones…. This acknowledgement that professional investors don’t automatically drive prices toward something close to their correct levels is a welcome shift in economic consensus. In the 1960s and 1970s, empirical evidence that financial market prices moved very quickly to reflect new information led most people in academic finance and many in economics to conclude that the prices were thus in some fundamental way right…

April 6, 2015

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