Friday, February 29, 2008

Warren Buffett Takes a Random Walk all over Efficient Market Theory (BRK.A)

From page 18 of the 2007 annual report PDF:

...For example, in 2001 and 2002 we purchased €310 million, Inc. 6 7/8 of 2010 at 57% of par. At the time, Amazon bonds were priced as “junk” credits, though they were anything but.

(Yes, Virginia, you can occasionally find markets that are ridiculously inefficient – or at least you can find them anywhere except at the finance departments of some leading business schools.)