The Inefficient Stock Market: What Pays Off and Why

by Robert A. Haugen

Sparked with wry wit and humor, this clever and insightful text provides clear and undeniable evidence that the stock market is, in the author's view, inefficient, and that important aspects of market behavior cannot be explained by models based on rational economic behavior. Intended for Financial Markets and Institutions, and Money and Capitals Markets courses at the undergraduate level. *Tackles important issues in today's financial market in a highly conversational and entertaining manner that will appeal to most students, with relatively short, 'punchy' paragraphs that entice readers to go on. *Provides clear explanations of the CAPM and the APT. *Analyzes the characteristics of individual stocks that are associated with high returns. *Predicts international stock returns. *Considers why cheap, profitable, and low risk stocks tend to produce a high return. *Looks into such areas as the payoffs to risk liability, profitability, and a stock's performance in past periods.

Genres: Finance, Nonfiction, Business, Economics

Paperback

First published January 1, 1999

Reviews

[David · Rating 4 out of 5]

Excellent read. The book is essentially a new academic way of portfolio creation. It compares its method against the old method (Graham's value investing) and modern portfolio theory (EMH and APT). The research and statistics provided are quite compelling and it does a good job noting the faults of modern portfolio theory.

Pros:
Short and sweet
Good mix of research based evidence and theoretical evidence
Objective based arguments

Cons:
There are some weak points in his ideas

[Sam · Rating 4 out of 5]

Haugen describes complex methods by which investors should be able to outperform the stock market averages.

[David Robins · Rating 1 out of 5]

Spends 150 pages to define true abnormal value.