The other day I watched the PBS documentary Mind Over Money (which is available streaming for Netflix subscribers). It’s a very good compare-and-contrast discussion of two primary sides of the academic view of markets – the efficient market side and the behavioral side. It was released in 2010, so the financial crisis was included in the film’s coverage, along with a look at historical market bubbles.  Numerous interview clips of some of the most prominent proponents of each side are included (Eugene Fama and Robert Shiller being two of the highest profile).
Overall, the documentary leans toward favoring the behavioral argument. The film provides a lot of evidence that we humans do not act rationally, especially where money is concerned. One of the more interesting experiments shown was how bubbles are created in the lab with experiment participants trading a depreciating asset. The video, though, does a good job of including contrary arguments as well.
Definitely worth viewing.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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