Careers as Efficient Markets

http://sfard.posterous.com/careers-as-efficient-markets

by sfard • 16 years ago

18 14 16 years ago

sfard.posterous.com

fbnt• 16 years ago

In my very humble opinion, what I just read was a lengthy and macchiavellan explanation of a simple concept: if your co-workers are happy with their job and you don't, and you all get paid the same, you might want to consider looking for another job that better fill your expectations.

There's no need for EMH theories and graphs to get that.

joe_the_user3• 16 years ago

Hmm,

Seems a bit behind the times...

Efficient market hypothesis (EMH) is a powerful idea. It started as a way to explain how prices of tradeable securities will reflect their real value.

Objectively, the efficient market hypothesis was handed it's head in the last crash. The only "power" in the hypothesis is the "powerful" ability it gives stock brokers to talk people into putting their 401Ks into some big gambles.

If it doesn't work for a relatively straight-forward market like securities, it seems doubtful it would for the very opaque and complex labor market.

yummyfajitas4• 16 years ago

Objectively, the efficient market hypothesis was handed it's head in the last crash.

Interesting. Could you please explain the trading strategy based on market crashes like the last one which you believe is a counterexample to EMH (assuming you are not still getting rich with it)?

http://www.overcomingbias.com/2010/01/how-to-complain-re-emh...

[edit: clarified what I mean by trading strategy, in response to tome.]

tome• 16 years ago

I'm not sure what you're getting at here. Some investors clearly have made returns over the last fifty years at substantially above the market rate.

joe_the_user3• 16 years ago

Uh,

On the one hand, it's simply false that you need a profitable counter-strategy to disprove the efficient market hypothesis.

On the other hand, Nichaulus Taleb, among others, did extremely well and was quite open about going against "efficient markets".

http://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb

Uh, and a huge number of people knew housing was over-valued. If you don't know the turning point in a market, knowing the market isn't efficient doesn't tell your next move - if the markets keep being inefficient, you don't make anything. Taleb made money but far more people made far more money - by finding the bigger sucker.

Edit: Also, the particular mechanisms of the last crisis, where synthetic bonds exploded via their unrealistic assumptions and "fair value accounting" had to be suspended, were a rather specific shot against the EMH.

chrismealy• 16 years ago

I kinda get the point he's making, but the EMH metaphor doesn't work at all.

msg• 16 years ago

He should take this a step further and talk about BATNA. It explains a lot of other reasons why you might stay in a crappy job, such as that the job market is lousy right now. You can also say the job market is not "liquid" right now.

Many people are sitting in local maxima rather than risking their milk money trying to climb the ladder. The sculptor works at a bank and the banker works at an antique store because it's not time to follow your dreams just yet...

In IT, the best explanation is here:

http://thedailywtf.com/Articles/Up-or-Out-Solving-the-IT-Tur...

wallflower• 16 years ago

"If all you are getting from work is a paycheck, you are underpaid." -Jim Rohn

Someone once explained to me that capitalism is based on overpaying you for the first few years of your career and underpaying you for the next forty years.

Careers as Efficient Markets

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