Research Review: The adaptive markets hypothesis

Rob Hamshar  |  Portfolio Construction Forum  |  30 August 2022  |  2.50 CE

Despite widespread criticism of the efficient markets hypothesis (EMH), the development of comparably broad alternatives for conceptualising financial market dynamics has been relatively lacking. One promising direction is the adaptive markets hypothesis (AMH), most associated with the work of Andrew Lo of Massachusetts Institute of Technology (MIT), which seeks apply the concepts and methods of ecology and evolutionary biology to financial market dynamics. Rather than viewing markets as composed largely of economically rational participants and trusting in the ...

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