James Simons built the most successful hedge fund, Renaissance, in the world. He built it violating...

James Simons built the most successful hedge fund, Renaissance, in the world. He built it violating the efficient market hypotheses. What form of the efficient market hypotheses did James Simons violate?

Expert Solution

James Simon propound that there is no existence of efficient market, renaissance technologies made the fortunes through luck. Those people having higher capability to analyse the information and making better decision and they can achieve high profit with low level of risk. There are several limitations over the success of market efficiency. There is a competition between the finite value f information. There is a chance for decaying of the information when it analyse by large number of people.
Behavioural economists studied about the imperfections in financial market through combining cognitive biases like over confidence, over reaction, representative bias and other predictable human errors. If applying the behavioural concept in the market efficiency; we cannot find and efficient market through this. Recession in 2008 played an important role in the valuation of the market efficiency.

Rahul Sunny answered 2 years ago

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