The Myth of Efficient Markets

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Any Theory proposed has to follow the pattern below

• Is allowed to make some reasonable assumptions.
• Explain some phenomenon observed today (but is not understood) using the assumptions and theory proposed
• Uses the assumption and thoery to make some predictions

This is true about Theories in any discipline -- Physics, Astronomy, Finance, Psychology.. you name it.

The objective of the paper is to prove that the consequences explained as part of EMH is unrelated to the assumptions and the theory therof. It goes on to prove that "Mass Underperformance" is a plain statistical phenomena that is an outcome of the way we define "Underperformance".

p.s. To download, click on the download button at the end of the row of the file that you want to view (in the new window that opens on clicking the above link).

The Inflation Game

Published on July 21, 2006 in the Business Line

Inflation is one of the most misunderstood topics today. Most people, incluiding Economists and Central Bankers tend to define it in terms of the Effects rather than the Causes. This often leads to rather meaningless debates between "Inflation Vs Deflation". This article shows that as soon as we acknowldege the underlying causative factors -- which is excess Money Supply -- then the outcomes are easy to predict.

BL did not publish some of the associated graphs and so am attaching the same here. Also, the BL introduction states that US has been running a tight-money policy under Greenspan -- that is also not correct. US has had a ultra-loose monetary policy for the last 20 years -- a casual look at the graph of M3 will confirm what I am saying. Additionally, the title "Maestro" used for Greenspan was a pun - the only thing he was a Master of was printing money.

It would be safe to state that when the obituary of Capitalism in the US is written 5-10 years down the line, it would be stated that Greenspan & Bernanke did more harm to the capitalist system than all others combined.

Economic Value Added: Much Ado About Nothing

Published on Jan 31, 2006 in the Business Line

Goes into the basics of how company performance should be measured and explains some of the significant drawbacks of using EVA. Ultimately, it is easy to see as to why EVA is just old wine packaged in a form that masks the underlying financial parameters it uses.