Regarding market efficiency.
I actually studied in Fama's class at U of Chicago (did not do very
well in it, but did the whole class and passed). I thought that EMH was
B/S, even then. It was our favorite topic for conversation among the
students. By that time, I already owned some BRK/B shares.
The efficient market theory says that an investor (including or
excluding insiders, depending on the version), cannot outperform a
certain measure of "average market", despite doing diligent research,
simulation, computer modeling, and so on.
Because it involves a negative, and is in some ways fuzzy, it is hard
to disprove and is almost impossible to prove.
Fama was a very bright person and a scholar of EMH, but he never flat
out said that he believed in it. He merely explored it in depth. So I
would not say anything like "Fama is a fool".
Much has been written about EMH and many historical anomalies were
found. With anything historical, it is very difficult to see if those
historical anomalies, like low P/E investing and such, would repeat
their outperformance the future.
Warren Buffett made a famous speech "The Superinvestors of Graham
and Doddsville" where he very succintly debunked the EMH.
He said, roughly, that he knows rather many individual people who
consistently "outperform the market" by a wide margin. That, as such,
is not at all a proof that this is not a random occurrence. But how
come, he asks, so many of them come from Graham's Columbia value
investing class? The possibility that this is a statistical fluke, is
so minuscule as to not be seriously possible.
That means to me that there are people who are able to beat the market
consistently, in a manner that is impossible to occur due to pure
So the question of existence of "superinvestors" is a settled one, for
me. I do think that EMH has been falsified beyond doubt.
That said, a much more pertinent question is: can a not-so-gifted,
average intelligence Joe Blow, like myself, not bright like Buffett or
Walter Schloss, busy with work and kids, and such, outperform the
This is a question that I considered and decided that I should not
bother answering it, and, furthermore, I should not even try to
outperform the market, such as S&P 500. I only make investments that
make sense to me, and even more importantly, do not make investments
that do not make sense to me.
Most of my investing career since 1996, until recently, was in a very
difficult and overpriced environment, but at least I have not lost
money and made some. (and did better than S&P 500, which is nothing to
brag about in this environment).