Most finance theorists’ own trading contradicted strict market efficiency.

Evidence

Probably a majority of the finance theorists discussed in this book have had some involvement in practical activity that would make no sense if the efficient-market hypothesis were taken to be an entirely accurate model of markets. This activity ranged from simple, small-scale private investment like the purchase of National General warrants, to the more demanding exploitation of anomalies such as the “turn-of-the-year” effect, and, on the largest scale, the massive arbitrage trading by Long-Term Capital Management. — Donald MacKenzie, An Engine, Not a Camera, 1114

Categorization

• SEED: Angle: the ‘career officials’ problem — theorists who professionally assert market efficiency while personally betting against it — a divide between public doctrine and private practice.
• XREF: connects to: Even the efficient-market theory’s own authors doubted full strong-form efficiency. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 295; Even efficient-market theorists privately acknowledged mispricings existed. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1109; Selling options on held stocks was argued to violate the efficient-market hypothesis. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1552 (+2 more)

Broader Connections

• Even efficient-market theorists privately acknowledged mispricings existed. #corroborates (0.90) — Donald MacKenzie, An Engine, Not a Camera, 1109
• Empirical trading experience can block acceptance of a theory’s core assumptions. #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1106
• Selling options on held stocks was argued to violate the efficient-market hypothesis. #exemplifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1552
• A theorist’s trading failure can vindicate a pricing model #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1119