Practitioners read efficient-market theory as claiming investment advice has zero value

Evidence

To practitioners, finance theory especially random-walk theory and efficient-market theory appeared to be claiming that “the value of investment advice is zero,” as one such advisor, Pierre Rinfret of Rinfret-Boston Associates, told a 1968 conference of 1,500 money managers. To Rinfret, the theory that led to this conclusion was fundamentally flawed: ”… random-walk theory is irrelevant, it is impractical, it is logically inconsistent, it is conceptually weak, it is limited in scope, and it is technically deficient.” Finance academics seemed to be saying, in an analogy drawn by Gilbert E. Kaplan, who chaired the conference, that one might just as well select stocks by throwing darts at the financial pages of a newspaper as take professional advice. — Donald MacKenzie, An Engine, Not a Camera, 352

Categorization

• XREF: This is the seed of the dartboard controversy that Mackenzie will trace as a classic performativity reversal. — connects to: Efficient-market theorists held that conventional security analysis adds no net value — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 351; The efficient-markets logic undercuts the very need for expert economic advice. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 146

Broader Connections

• Efficient-market theorists held that conventional security analysis adds no net value #corroborates (0.95) — Donald MacKenzie, An Engine, Not a Camera, 351