The review that was meant to run in the June issue of Conde Nast Portfolio—which was shut down after the May issue—has found its way to the Sunday Washington Post (and a Friday evening online posting). The gist:
Fox, a business columnist for Time,
spins a fascinating historical narrative, beginning with economist
Irving Fisher's paean to markets in, alas, 1929. Postwar economists
such as Paul Samuelson
noticed that most investment pros do not beat the averages. This led to
the one positive contribution of the efficient-market hypothesis: Jack Bogle's
invention of index funds, which mimic the performance of the stock
market as a whole and keep ordinary people from wasting their money
trying to beat it.
Fox recognizes that true believers in the market's efficiency
suffered from a "blinkered" mindset and "tunnel vision." Yet I think he
lets them off too easily. He laments (as if it were necessary) the lack
of any alternative "grand new theory" and finds that the debate has
resulted in a "muddle." Fox concludes, "If you do come up with an idea
for beating the market, you need a model that explains why everybody
else isn't already doing the same thing." Not necessarily. Markets
aren't physics. Maybe no one model explains them.
I have it on reasonably good authority that sometime soon a review will appear in another major newspaper from another very prominent student of the market, and he will say that it's a good book and all but I'm too hard on the true believers in the market's efficiency. Sigh.