Monday, 23 July 2012

The Kay Review

It's got some great stuff in there. You can download the final report here.

Being a saddo, I find the most intersting stuff is about the nature of ideas that underpin existing market practice. I don't have time to do a proper overview so thought I'd bung up a few snippets I like.

Like this:
Regulatory philosophy influenced by the efficient market hypothesis has placed undue reliance on information disclosure as a response to divergences in knowledge and incentives across the equity investment chain.
 And this:
Anthropomorphisation of ‘the market’ in phrases such as ‘markets think’, or ‘the view of the market’ is common usage. It should hardly need saying that the market does not think, and that what is described as the view of ‘the market’ is simply some average of the views of market participants. ‘The market’ knows nothing except what market participants know
 And this:
measures to make the market more ‘efficient’, in the technical sense implied by the efficient market hypothesis, may have the effect of making the market less efficient in the broader and more important sense of achieving better resource allocation through better corporate decisions.

And the best line in the Review:
we see the sell-side analyst as a dispensable link in the chain of intermediation

No comments: