It’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please.
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It’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please.
John Quiggin 
Right. Solar power & whitegoods. & that’s it.
LOL. Sidestepping a little.
Experience seems to show (IMO) that good ideas catch on slowly whereas bad ideas catch on quickly. It makes me wonder how progress ever happens. Or is it just that the last 40 years has been a particularly triumphal time for bad ideas? That’s a span equal to my adult life so I guess I might have received a biased view.
Did I just see a BOM rainfall graphic for Qld with a new color for rain amount? (Over 900mm I think) Both temp and rain needing new colors in the same month? Nothing to see here, move along.
@David Allen
Well, AGW is very much a done deal now. The warming has already started and 4 to 6 degrees C of warming are built into the system. Whilst still trying to wean our economy off fossil fuels, we probably need to consider how we adapt our infrastructure and dwellings to what is coming. I note the Thames Barrage is designed to protect London from flooding by storm surges in up to one in a thousand year events. At least that is the claim. Also, “when Workington’s flood defences were rebuilt following the great storms of 2005, residents were assured they could withstand a “once in a century” flood…. What the local authorities hadn’t reckoned on was that just four years on, the Cumbrian town, and its near neighbour, Cockermouth, would be deluged by what was described yesterday as a once in a millennium event.” – Cumbria Floods By Nigel Bunyan, Paul Stokes and Gordon Rayner – Telegraph 21 Nov 2009. There are also claims that in Nashville 2010 a “once in a thousand year flood cost Nashville a year’s worth of economic activity.”
This is what a “one in a thousand year flood” search brings up on the net. Of course, as they stand these are just jouranalistic claims. We would have to know what the science of climate and flood modelling is now saying. It seems a reasonable bet however that what was a “thousand year flood” under established modelling criteria is probably now a “hundred year flood”. By extension, given the manner in which extra energy in the climate system drives extreme events, we might well have to face “once in a hundred years” bushfires every ten years here in Australia.
It would seem that we need to now begin climate-proofing our infrastructure as much as possible. For example, new dwellings should only be permitted to be built above the old one in a thousand year flood line. Towns and suburbs where feasible should be moved above that line. The land freed up should become open parks and grazing land not regenerated bushland as the latter would merely constitute a bush fire hazard. Large open parks and grazing land with few trees will be needed as buffers around towns and outlying suburbs, Concentric service roads and containment lines will need to placed around them. You will need riot trucks with firehoses to keep the real estate lobby away from what they think are prime new areas for housing estates. 😉 More seriously, we will need ironclad planning laws tieing up this land.
All new dwelling construction will need to meet category 5 cyclone standard and a new catastrophic bushfire standard. It’s very possible that underground dwellings on hills will be required. It’s possible to build into a hill so a house has only one (north facing usually) exposed frontage. This can be secured by storm proof and fire proof shutter doors in an emergency. Alternatively, very solid brick and stone block houses can be built with storm/fire shutters on the windows. This all sounds extreme. Given what’s coming it will prove necessary in the long run. Oh and don’t buy anything within 10 vertical meters of mean sea level. I am not saying sea levels will rise that far (not for several hundred years anyway) but storm surges and cyclone driven waves can for sure.
Now I can sit back and get flamed but I am not trolling. I am saying “Let AGW happen (and the horse has already bolted) and this is now what we must think about.”
And this an interesting claim, though unsourced and with no references.
“These are rough figures, but renewable energy around the world gets about $60bn in subsidies a year. Oil and gas get somewhere between $750bn and $1trillion a year from governments in subsidies.”
Anyone want to comment on this? Anyone have references on this?
Ikonoclast – I’d be interested in that too. Also interested in energy R&D funding both for Australia and globally; my search efforts don’t seem to have the kind of breakdown of where it goes that can tell a layperson like me what’s getting the funding and what’s not. My impression – no more than an impression – is that coal and gas mining and CCS get the lions share.
@Ikonoclast
The Right often tell us that we should just pay to adapt to climate change. Let’s see what they think about the cost of *really* doing this: underground power lines, roads more resistant to washing away, restrictions on where new housing can be built, housing standards as you describe, etc. They’re not serious. It’s just another stalling tactic.
@Ikonoclast
See http://www.dblinvestors.com/documents/What-Would-Jefferson-Do-Final-Version.pdf for some eye opening (US) data on fossil vs. nuclear vs. renewable subsidies.
Also Ben, they’d need a model of regional climate impacts to work out how much to pay, what to spend it on and when to commission the work. Of course, you can’t trust computer models so obviously, that’s not a serious proposal.
It’s simply them being non-responsive — like saying we’d be better off spending money on malaria treatment. It’s pure handwaving. Of course we should also adapt. But as the aphorism runs an once of prevention is worth a pound of cure and we have models that bear this out.
@Ikonoclast
Globally I think the worst offences are things like subsidised petrol in Saudi Arabia. In Australia we have the diesel fuel rebate, non-indexation of fuel excise, FBT on cars as part of pay packages, infrastructure capital subsidies for coal railways and ports, the 65% carbon tax exemption for LNG related emissions, 94.5% carbon tax exemption for smelters, below-market price thermal coal from Cobbora mine NSW and below market prices for coal fired electricity used by aluminium smelters. However I’m not sure it makes sense to add all these together. For example I wouldn’t equate a tax reduction with a cash payment subsidy.
I’m intrigued why the guvmint hasn’t asked for a refund of the $1 bn paid to brown coal burners as a downpayment on exit money. The big ones aren’t going anywhere. Generally I think highly visible cash payments are better than hidden cuts to input prices and taxes. The Greens want struggling artists to be subsidised since they are national treasures well think of aluminum smelters the same way.
Aluminium smelters national treasures??? Howls of derisive laughter. Aluminium is too cheap going by recycling rates and the world needs to shut down a few smelters.
It’s also very polluting.
If we really want an aluminium smelting industry in Australia the government needs to subsidise a conversion of all smelters to the much cleaner and less energy intensive carbothermic process.
Given that Gillard has telegraphed her punches to a noted (in his mind) pugilist called Tony Abbott, it is worth looking at the real issues, not the faux issues of our politics.
The problems of Labor and Liberal in Australia are ideologically deep-seated; suborned as they are and controlled by oligarchic capital, particularly mining capital. Don’t forget it was a conspiracy by Gillard, her faction supporters, union officials and the mining magnates to dump Rudd, dump the resources super tax and install Gillard, the capitalists’ puppet.
Beyond these issues of banal, crony politics is the capitalist system itself. The problems are systemic and inhere precisely and comprehensively in the entire capitalist system. Reforms within the capitalist framework (democracy, social welfare) are always resisted and if they make progress are later wound back. Witness, 1970 to the present. This represent, an adult working lifetime of regression and return to oppressing labour and the poor. It’s the nature of the beast and intrinsic to the capitalist system itself.
Capitalism always seeks new arenas of operation, new territories and new strategems of exploitation to solve its internal crises and contradictions. Thus after the stagflation of the 1970s we had globalisation, off-shoring, retrenching the welfare state as far as possible, shifting the share of national income away from labour to capital, the private debt explosion and exploitation of the last remaining unexploited parts of the environment.
But each of these processes have final limits. You cannot off-shore to the second and third world indefinitely. Eventually they become second and first world. You cannot retrench welfare below zero welfare. You cannot reduce wages below the reporductive cost of labour. You cannot increase private debt beyond the capacity to repay. You cannot loot and destroy the entire environment and expect the economy to still run without a supporting environment.
We have now reached the end game of capitalism. I would not be confident in saying this (despite all the other apparent internal contradictions of capitalism) except that we have (very nearly) reached the one limit which can be assessed on the basis of physics, the penultimate hard science. This is the limit to growth or more precisely the hard limits imposed by the finite materials and energies (both stocks and flows) available on earth. These limits relate to input resources, waste absorption and natural cycle disruptions (CO2 cycle, N2 (nitrogen) cycle etc.
Capitalism is about to show itself to be maladapative in the extreme. Capitalism as we know it now (late stage, oligarchic, corporate, crony, imperialistic and wholly dependent on endless growth) is about to hit the wall. To use an analogy, late stage capitalism is a runaway express locomotive about to hit the Terminus. We are already so close and moving at such speed that even if we hit all the brakes, the collision would still be disastrous but might be survivable by the passengers in the last carriage. However, we are stoking the boilers (an archaic but appropraite metaphor for a fossil fuel powered system) and accelerating towards our doom. The capitalists in the smoking car (“follow the cigar smoke, find the fat man there”) think their paradise will last forever. In historic time-scales the train-wreck is very close. In fact, you can reliably say the very beginnings of the train wreck start (or started) in about 2015 plus or minus 5 years.
Our last chance, if we have one, is for the educated part of the world population to realise what is happening. It will take a series of salutary disasters whose cause is ambiguously rooted in climate change, resource depletion etc. The vast middle classes and working classes around the globe will have to start hurting and hurting badly. Then the questions will start about why our elites totally misled us about economics, the environment and our collective future. There will be an enormous set of revolutions and reactions at this juncture. The outcome is entirely uncertain. I am a material determinist but not an historical determinist.
The Libs can’t explain how they propose to wind back the $18200 tax-free threshold on personal income tax. They will spend the next 9 months trying to wriggle off that hook.
The ALP has to find a way to get voters to focus on $18200 tax free dollars.
Ikonoclast: “I am a material determinist but not an historical determinist.”
I’d describe you as comic relief.
@Mel
So that’s how things must look from the bottom of the barrel.
Actually if the Libs come up with a program that the PBO gives their stamp of approval to then most of their baggage would disappear.
I have always believed a government should be gotten rid of after two terms.
Indeed, Katz.
That is why they are casting the line of “it is a matter of trust”. The Coalition have got no substantial policy details at all. Pyne on the ABC this morning was saying “of course we have got policies, you’re (ABC) just not picking them up” and got specific, “we’ve got a very generous maternity leave policy, and we are removing the carbon tax”, he said.
That’s about it. So it is better, the Coalition think, to amplify the lie that the Coalition have already created that being that Toxic Tony and crew are totally honest and Labour are not, when nothing could be further from the truth.
I’m pleased to see that Toxic Tony is determined to lift the tone of politics.
He do this most dramatically and instantly simply by quiting politics immediately.
“Mozambique floods – More than 40 people dead and almost 150,000 residents forced to flee to higher ground by rains and overflowing rivers.”
Aljazeera, 29 Jan 2013 10:49
“Beijing is left fighting for breath as pollution goes off the scale – The smog was so thick that more than 50 flights were cancelled at Beijing Capital International Airport, causing chaos ahead of Chinese New Year, when city-dwellers travel to see relatives.”
The Independent, 29 Jan 2013
“To have the same people go through this again after just rebuilding their homes is terrible … It was supposed to be a one-in-100-year flood, not a one-in-two-year flood.”
Quote by Ipswich mayor Paul Pisasale in The Age,29, Jan 2013
“The last decade has produced record-breaking heat waves in many parts of the world. At the same time, it was globally the warmest since sufficient measurements started in the 19th century.
…
Under a medium global warming scenario, by the 2040s we predict the number of monthly heat records globally to be more than 12 times as high as in a climate with no long-term warming.”
Excerpts from Abstract ‘Global increase in record-breaking monthly-mean temperatures’ by Dim Coumou, Alexander Robinson, Stefan Rahmstorf, Climatic Change, January 2013
“Community expectations of what the government must do for them in the wake of natural disasters are increasing. That is how it should be. But building resilience requires a shared responsibility between individuals, local communities and governments.”
‘The recipe for climate disaster has changed’ by Jim McGowan, Adjunct Professor, School of Government and International Relations at Griffith University, in Climate Spectator, 31 Jan 2013
Unburnable carbon the new sub prime mortgages?
“… a recent McKinsey report that noted that half the value of listed investments in industries such as coal and oil and gas were ascribed to cash flows that came after year 10, so that means half the current value of listed investments is ascribed to assets that will not be exploited until after 2021.
“That is a hell of a long time in the current investment environment,” Leggett told Climate Spectator. Particularly, as was raised quite evocatively by Paul Gilding on this website last September, the Potsdam Institute concluded that the carbon budget would be exhausted by 2024 if the world continued on its current rate of emissions.
“One clear implication is that a significant proportion of current listed reserves – as well as future reserves that are generated from current CAPEX – will need to remain in the ground,” the report says. And no one appears to be making any judgment about which reserves would be most likely to be developed and which would have to stay in the ground.
But is anyone listening? “It’s like bashing your head against a brick wall,” Leggett says. “In the spring of 2007, the very few people pointing out the toxicity in mortgage-backed securities were having the same experience. This is not an argument for investments in cleantech. This is an argument for having regulators point to risk.””
Climate Spectator, 13 Jul 2011
“The bottom line is this: There will be a day of reckoning when it comes to fossil fuels, and investors need to take far stronger steps to avoid the climate cliff. Fundamental shifts in investment are warranted, and investors must begin diverting capital away from fossil fuels and toward clean energy at a much faster clip. The societal costs of inaction on the climate are immense, and the risks are rising just as surely as the seas.”
Forbes, 17 Dec 2012
“A US pension fund with nearly $2 billion in assets is considering selling its holdings in some of the world’s biggest oil and gas companies because of the threat posed by climate change.
…
Mindy Lubber, president of the US-based Ceres investor advocacy group, agreed, saying the move underlined the mounting push for investors to acknowledge the long-term risk of investing in fossil fuel companies, as policies to curb climate change keep emerging. “The divestment movement without question is re-raising the question of whether fossil fuel companies are the best investment and I think over time they’re not going to be,” she said.””
Financial Times, Thursday, 31 Jan 2013
A report by Aperio Group finds that the risk among endowments to divest from coal and major carbon producing industries can be negligible.
“According to Dan Apfel of the Responsible Endowments Coalition, “This report answers the critical question that students and university endowments have been asking: ‘Can we divest from fossil fuels without incurring additional risk?’ Now we have the math to show that carbon divestment is not just good for people and planet, but can have negligible impact on risk or profit.”
aiCIO, 29 Jan 2013
The 2012 World Energy Outlook, released by the International Energy Agency, provides an annual snapshot of energy trends and projects their impact on the climate, said that fossil fuel subsidies totalled over $520 billion last year. Around $88 billion was spent worldwide supporting renewable energy.
The Qld State Government has poured almost $7 billion in subsidies into the coal and coal seam gas industries in the past five years. A study, partially funded by protest group the Friends of Felton, also found that the renewable energy and energy efficiency industries also received about $900 million over the five years, but still faced barriers such as access laws for large-scale wind and solar projects. Report author Trevor Berrill, a sustainable energy consultant, also found that the external costs of the electricity industry were as much as $6 billion. “Public subsidies to this polluting, destructive industry defy common sense.”
According to Australia Institute, every year, the federal government provides more than $4 billion in subsidies to the mining industry, including nearly $2 billion in fuel tax credits. The coal mining industry is a major beneficiary of these subsidies.
We are paying the price for cheap energy, write Linda Connor and Stuart Rosewarne, in ‘The real cost of coal is quickly adding up’ Newcastle Herald 21st May 2012.
“Cheap coal” is a myth. And like all myths, we accept its wisdom without thinking. …. Both state and federal governments provide subsidies to the coal industry. Direct subsidies include coal terminal lease fees and providing infrastructure so that coal can be transported to electricity generators or to port loading facilities.
Recent federal government funding for the Hunter Valley Corridor Capacity Strategy rail upgrade totals almost $700 million, with further funding in the pipeline.
The whole mining industry receives a subsidy in the form of a tax credit on the diesel that fuels the trucks and machinery. Unlike the rest of us, mining companies do not pay the federal government tax on fuel. This subsidy currently amounts to $2 billion a year or an $87 annual contribution from every Australian.
NSW residents subsidise the price of coal to power stations as well as pay higher electricity prices. The previous Labor government undertook to supply coal from the NSW government owned Cobbora mine to electricity generators at a third of the price that coal could sell for in export markets, in order to secure the viability of state generators prior to privatisation. As a result, the government (and the people of NSW) will forego $2.7 billion in revenue, based on current export prices, through to 2020.
The coal industry will receive compensation once the carbon tax commences in July 2012. In NSW, instead of closing the “gassy mines” that produce high levels of greenhouse gases from methane gas leakage, NSW coal owners can draw on the $1300 million allocated to the Coal Sector Jobs Package over six years. “
@Ootz
Since when is a selective discount on government charges the same as a subsidy? Your example is the diesel excise rebate for mine trucks. You could say those who buy a weekly metro bus ticket instead of daily are getting a subsidy. Comparing such ‘breaks’ with renewable energy is a minefield pun semi intended. A report for the then TRUenergy concluded that consumers could pay $25 bn too much on power bills out to 2030 because of the renewable energy target
http://news.smh.com.au/breaking-news-national/ret-to-cost-25bn-too-much-report-20120907-25i0x.html
$25 bn beats your $2 bn hands down. However most of this barks up the wrong tree since the real problem is reducing emissions for least cost. We have to compare whole system costs over the same time scale, not my subsidy is or was bigger than yours.
Totally off-topic, but had to rant somewhere.
I absolutely loathe the tyranny of the early morning risers. So, I wake up in the middle of the damn night (6am) to get to that which pays the bills. Occasionally there is a morning meeting before work. OK fine, needs to be done. I make up for it by sleeping until 11am or so on the weekends. Now, some people just don’t seem to get the damn hint that waking me up at 7 today is not a good idea. Congrats, it destroyed today and will stuff me up more for tomorrow. Don’t try to patronise me or act superior because your body clock works at different hours to mine. I would love to strike out on my own at some point and schedule meetings for 6pm to 9pm (when I’m feeling fresh as a daisy) just so I can call others lazy and grumpy and feel smug while the morning fascists are yawning and rubbing their eyes.
Rant to no-one in particular. Not happy Jan.
Im won over to solar panels since prices came down so much. Now the Chinese only have to build decent Oscilators on their own and we have an affordable CO2 free energy source for the sunnier parts of the world.
@Will
I was always a natural late riser and a person who functioned better at night so I sympathise. However, these days I rise with the sun. Part of getting older I guess.
Hugh White nails the cretinous Afghanistan debacle:
http://m.theage.com.au/opinion/politics/afghanistan-mission-a-total-failure-20130204-2duf0.html
I condemn Howard for his craven and spurious invocation of the ANZUS Treaty. And I condemn Rudd and Gillard for their refusal to restore the dignity of Australia by withdrawing support for the West’s folly in Afghanistan.
Finally, the US accuses S&P of fraud:
http://dealbook.nytimes.com/2013/02/04/u-s-and-states-prepare-to-sue-s-p-over-mortgage-ratings/?nl=todaysheadlines&emc=edit_th_20130205
The time is getting ripe for EU and US negotiations on ‘doing something’ about ‘high finance’.
How can you sue rating agencies when so many buy and hold a diversified portfolio. Investment ratings are superfluous information that stock pickers buy. Passive investors did not rely on the ratings to buy and hold a portfolio that matches the whole market.
Because there are organizations that rely on ratings agencies for what bonds they buy.
Some can only buy AAA rated debt for example and it was painfully obvious that CDO’s rated AAA by some agencies were not.
The Leading fund manager I was with at the time (2007/8) wouldn’t touch them with a barge pole.
There’s a grey area between fraud and negligence.
The US justice system appears to have a category called civil (i.e., non-criminal) fraud. I’m having a little trouble getting my head around that concept.
Negligence is more straightforward. Undoubtedly much harm was done. Presumably, some investors were motivated to buy certain products based on their ratings. But do the ratings agencies owe a duty of care to these investors? The investors didn’t hire the ratings agencies.
However, the sellers of the assets rated may have known that the agencies missrated them. Knowing that, the sellers fraudulently, recklessly or negligently used those ratings to help them to misrepresent their products.
It appears to me that the ratings agencies are an appropriate target in the eyes of the US Justice Department because they are likely to be found not liable.
Katz, On credit ratings agencies, see http://conversableeconomist.blogspot.co.nz/2011/08/where-did-s-get-its-power-federal.html
• Banks satisfied their regulators by just heeding the ratings of agencies rather than doing their own evaluations of the risks of the bond.
• Insurance, pension and securities market regulators followed suit in privileging credit ratings agencies in prudential regulation compliance.
• Active investors want stable ratings to reduce the need for frequent and costly adjustments in portfolios.
• Passive investors buy a portfolio matching the entire market so credit ratings do not matter.
Those who criticise the efficient market hypothesis must think that credit rating agencies can potentially add value.
Under the efficient market hypothesis, credit rating agencies are a form of stock picking. Stock pickers think they can beat the market, but only the top 3% of investment fund managers win a return to just cover the costs and risks of active trading and their research departments
Eugene Fama argues that stock prices predict changes in ratings better.
He also said that bonds are simpler to evaluate than stocks because there is a downside risk, but no upside. Bonds have become more complicated because of the securitization but still not that big a deal. there is still only downside to manage.
Fama’s solution is to increase bank capital requirements to 40-50 percent. They halved from 30% when deposit insurance was introduced in the 1930s.
Jim Rose, those people who promote financial myths (including textbook authors and bloggers), who talk about ‘the market’ and ‘the market portfolio’, might wish to consider what they are doing in the light of the notion of fraud or negligence.
Are you sure you are not engaging in myths dissemination?
@Jim Rose
“How can you sue rating agencies when so many buy and hold a diversified portfolio. Investment ratings are superfluous information that stock pickers buy. Passive investors did not rely on the ratings to buy and hold a portfolio that matches the whole market.”
Jim, you don’t seem to know that the problem with rating agencies concerns debt-like securities and not ‘stock’ (equity)!!!
I write ‘debt-like’ securities because you don’t seem to know what ‘securitisation’ is about and I want to indicate to you that we are not talking about ‘stock’.
Ernestine Gross, There are also passive investment funds such as Vanguard that buy and hold diversified bond portfolios.
There is still no upside to analyse in rating the risk of securitised bonds. Like all bonds, the issue is default risk. With shares, both ups and downs must be prophesied.
Like all stock pickers, rating agencies pretend that they can beat the market in predicting bond defaults and charge a fee less that the value of this new knowledge.
1. Do you hold a diversified superannuation portfolio? Does it buy and hold to minimise trading and research costs and management fees?
2. How large a share of funds (shares and bonds) under management is now with the index-link passive funds inspired by the efficient market hypothesis?
p.s. Fama is director of research of Dimensional Fund Advisors, which had $213.7 billion under management in 2011. It rejects stock-picking and market timing and uses enhanced indexing to design portfolios and limit trading costs.
see http://www.dfaau.com/firm/research.html
@Jim Rose
Your questions 1 and 2 are unrelated to securitisation, the role of proverbial Wall Street Banks and rating agencies in the marketing of CDOs and other derivatives and the GFC. That is, my comment @33 is still valid.
May I ask you to put a question to “Fama”. What data would the Dimensional Fund use to apply its indexing method in a ‘market’ consisting exclusively of index funds? (Hint: If “Fama” provides any answer other than his method would not work, don’t believe anything else he may say.)
@Ernestine Gross to save you looking up the wiki, enhanced indexing comprises:
1, Enhanced cash – Enhanced cash managers use futures to replicate the index then they take the roughly 95% of the capital left after buying futures (with their inherent 20 to 1 leverage) and purchase fixed income securities. The key to performance in these strategies is that the yield on the fixed income strategies is greater than the yield that is priced into the futures contracts (for the leverage).
2. Index construction enhancements – Instead of relying on external indexes created by third parties like S&P or Dow Jones, enhanced indexes often use proprietary indexes. Alternatively, they use dynamic rather than static indexes.
3. Exclusion rules – some enhanced indexes eliminate securities likely to reduce performance (e.g. companies with excessive debt or those in bankruptcy).
4. Trading enhancements – Utilizing intelligent trading algorithms, some enhanced index funds create value through trading (e.g. by buying illiquid positions at a discount or by selling more patiently than traditional index funds).
5. Portfolio construction enhancements – Enhanced index funds sometimes implement hold ranges that reduce portfolio turnover by allowing funds to hold positions during buffer periods even after traditional sell signals are triggered.
6. Tax-managed strategies – manage buys and sells to minimize taxes.
@Jim Rose
Is the content of your post @ 36 the answer you obtained from “Fama” in response to my question @ 35? If so, I strongly suggest you ignore it (does not answer my question).
@Ernestine Gross indexing is a unilateral strategy. market work with zero intelligence traders.
@Jim Rose
A ‘unilateral strategy’ is what you have been playing in a word game. You write as if either I had asked you for information on ‘indexing’ or as if you need to tell me. But neither is true. You just talk your talk. This ‘unilateral strategy’ in word games is effective if it is played by a person who has institutional power; you don’t.
Your ‘unilateral strategy’ (talking your talk) avoided you answering my question. However, your talking your talk resulted in the remarkable result that an index fund (I can’t be bothered going back to look up its name), associated with “Fama” and inspired by the ‘efficient market hypothesis’ is conditional on ‘market work with zero intelligence traders’. This is priceless.
@Ernestine Gross Re zero intelligence traders,
how long after the explosion did it take the share market to work out who was the supplier of the faulty parts to the challenger space shuttle in 1986. how much of this learning and discovery took place while share trading was suspended?
@Jim Rose
I suggest you apply your ‘unilateral strategy’ in word games to find the answer.
Financials are like any business, they will maximise profits when market conditions favour them. Blame central banks for running loose monetary policy.
@Ernestine Gross The DFA portfolios are heavily weighted with small and value stocks.