The efficient market hypothesis is, roughly speaking, the idea that asset prices ‘reflect all available information’. This means that the only way to consistently outperform the market is to have access to information that isn’t widely known, or to get lucky.
In particular, it implies that even the fanciest of funds, managed by very smart people with fancy degrees from even fancier universities, will on average fare no better than a monkey throwing darts at a list of stocks.
For many decades now, physicists have been trying to ‘unify’ quantum mechanics and Einstein’s general relativity into a quantum theory of gravity. This has proven to be very difficult, and achieving such a unification is one of the major outstanding problems in theoretical physics. To understand why, let me first give you a whistlestop tour of some topics in physics.
Imputation is ‘filling in’ missing values in a dataset. So, for example, say I have a dataset consisting of the name, sex, sex and height of some individuals as follows:
| Name | Sex | Age | Height |
|---|---|---|---|
| Alice | Female | 25 | 165cm |
| Bob | Male | _ | 180cm |
| Carol | _ | 55 | _ |