“Treatment of the apparently whimsical fluctuations of the stock quotations as truly non stationary processes requires a model of such complexity that its practical value is likely to be limited. An additional complication, not encompassed by most stock market models, arises from the manifestation of the market as a nonzero sum game.”

— Richard Arnold Epstein

Source: The Theory of Gambling and Statistical Logic (Revised Edition) 1977, Chapter Nine, Weighted Statistical Logic And Statistical Games, p. 295

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Richard Arnold Epstein27

American physicist 1927

Richard Arnold Epstein (1927) American physicist

Source: The Theory of Gambling and Statistical Logic (Revised Edition) 1977, Chapter Nine, Weighted Statistical Logic And Statistical Games, p. 299

“The stock market is not the economy, and the economy is not the stock market.”

Kai Ryssdal (1963) Radio host, United States Navy officer

repeatedly on his radio program " Marketplace APM https://www.marketplace.org/2019/09/30/the-stock-market-is-not-the-economy/" (September 2019)

“But the stock market is not 1:1-it is not a zero sum game. So those deaf, dumb and blind economists can't find the capital flows.”

Andy Kessler (1958) American writer

Part VII, The Margin Surplus, Wealth How?, p. 261.
Running Money (2004) First Edition

“The most important thing I have done is to combine something esoteric with a practical issue that affects many people. In this spirit, the stock market is one of the most attractive things imaginable. Stock-market data is abundant so I can check everything. Financial markets are very influential and I want to be part of this field now that it is maturing.”

Benoît Mandelbrot (1924–2010) Polish-born, French and American mathematician

New Scientist interview (2004)

“Reflecting an amalgam of economics, monetary, and psychological factors, the stock market represents possibly the most subtly intricate game invented by man.”

Richard Arnold Epstein (1927) American physicist

Source: The Theory of Gambling and Statistical Logic (Revised Edition) 1977, Chapter Nine, Weighted Statistical Logic And Statistical Games, p. 296

“Since in reality the stock market is inhabited by mere mortals, there is no way that the stock market can be efficient in the way that economists define the term.”

Steve Keen (1953) Australian economist

Source: Debunking Economics - The Naked Emperor Of The Social Sciences (2001), Chapter 10, The Price Is Not Right, p. 216

“Nowhere have REH’s epistemological flaws and empirical disappointments been more apparent than in efforts to model financial market outcomes, which are largely driven by participants’ expectations. Beginning with Robert Shiller’s (1981) pathbreaking paper, research has shown that REH models are unable to explain the basic features of fluctuations and risk in stock markets. Likewise, in their magisterial work on the current state of international macroeconomics, Maurice Obstfeld and Kenneth Rogoff (1996: 625) concluded that “the undeniable difficulties that international economists encounter in empirically explaining nominal exchangerate movements are an embarrassment, but one shared with virtually any other field that attempts to explain asset price data.” The failures of REH explanations of aggregate outcomes gave rise to alternative approaches, most notably behavioral finance models. However, sober assessments even by the likes of Obstfeld and Rogoff did not dispel the faith of most economists that REH models would one day be able to explain financial market outcomes and macroeconomic performance.”

Roman Frydman (1948) American economist

"Which Way Forward for Macroeconomics and Policy Analysis?" 2013

“The inductive-reasoning system I have described above consists of a multitude of “elements” in the form of belief-models or hypotheses that adapt to the aggregate environment they jointly create. Thus it qualifies as an adaptive complex system. After some initial learning time, the hypotheses or mental models in use are mutually co-adapted. Thus we can think of a consistent set of mental models as a set of hypotheses that work well with each other under some criterion—that have a high degree of mutual adaptedness. Sometimes there is a unique such set, it corresponds to a standard rational expectations equilibrium, and beliefs gravitate into it. More often there is a high, possibly very high, multiplicity of such sets. In this case we might expect inductive reasoning systems in the economy—whether in stock-market speculating, in negotiating, in poker games, in oligopoly pricing, in positioning products in the market—to cycle through or temporarily lock into psychological patterns that may be non-recurrent, path-dependent, and increasingly complicated. The possibilities are rich.”

W. Brian Arthur (1946) American economist

Source: Inductive Reasoning and Bounded Rationality (The El Farol Problem) (1994), p. 8

“The stock market was created by the telegraph and the telephone, and its panics are engineered by carefully orchestrated stories in the press.”

Marshall McLuhan (1911–1980) Canadian educator, philosopher, and scholar-- a professor of English literature, a literary critic, and a …

Source: 1960s, Counterblast (1969), p. 106

“Value stock returns are impossible to estimate using the traditional methods, because most of the excessive return arises from the slow improvement in valuations that occurs as doggy stocks become less doggy over time.”

William J. Bernstein (1948) economist

Source: The Four Pillars of Investing (2002), Chapter 2, Measuring The Beast, p. 68.

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