Slaughtering the sacred cows

Philippe Ithurbide, the global head of research, analysis and strategy of Amundi Asset Management, listed lessons that market participants should take away from it. He made his points at a luncheon talk organised by SMU. The global financial crisis (GFC) has many consequences for investors, he noted. Many sacred cows in finance need to be slaughtered. Some have already been questioned by the market – the market-efficiency hypothesis, the capital-asset pricing model, the use of normal distribution to describe market outcomes, the rationality of market participants and the homogeneity of traders and investors. After the GFC, many more sacred cows may have to be slaughtered. At a time when more and more people are getting increasingly exuberant about the markets, Mr Ithurbide gave a timely reminder that the road to recovery remains long and arduous.