Actionable? My very intelligent college roommate owned his own financial advising firm. He spent two weeks on the phone with me convincing me that it would be gigantically more sensible to cash out these options and give them to him to invest "in case, in the future, people get up in the morning, put their clothes on, and go outside instead of sitting in front of their PCs all day ordering stuff off the internet."

This actionable advice is also 100% justifiable without recourse to claims of superior perception simply by the high value of diversification. Keeping a large sum of money in a single stock's options is really risky, even if you think it's +EV, and even if you think some EMH conditions don't apply (you had insider knowledge the market didn't, the market was not deep or liquid, you had special circumstances, etc). Same reason I keep telling kiba to cash out some of his bitcoins and diversify - I am bullish on Bitcoin, but he should not keep so much of his net worth in a single volatile & risky asset.

He sent me books to read including this one first published in 1841.

MacKay is not the most reliable authority on these matters, you know. The book I mention punctures a few of the myths MacKay peddles.

Jim, my roommate, had been referring to tech as a bubble for a year or two before I talked to him in October of 1999. The action he was taking with his other clients was to simply not get in to tech. This was a horribly unsatisfying strategy until about the middle of 2000 when tech was well into its slide from the top.

An anecdote, as you well realize. You recall the hits and forget the misses. How many other bubbles did Jim call over the years? Did his clients on net outperform indices?

Meanwhile, my friend invested my money in REITs, Berkshire Hathaway, banks, and a bunch of other asset classes not even dreamed about by most of my fellow techies. The money I had given him grew by 40% more or less, I don't remember exactly

And would have grown by how much if they had been in REITs in 2008?

I agree it is HARD to act on bubbles, shorting them is scary and fraught with risk, you are betting you can stay solvent longer than the market can stay stupid, which is quite a bet indeed.

It's not just that you're betting that you can stay solvent longer, you're betting that you have correctly spotted a bubble. There was a guy on the Bitcoin forums who entered into a short contract targeting Bitcoin at $30. Last I heard, he was upside-down by $100k and it was assumed he would not be paying out.

Do you think it is just a roll of the dice that 9 students of Ben Graham all ran funds which had long term returns above market averages?

As a matter of fact, someone a while ago emailed me that to try to argue that EMH was false. This is what I said to them:

A cute story from long ago, but methinks the lady doth protest too much - he may say he has not cherrypicked them, but that's not true: the insidious thing about datamining and multiple comparison is that there's nothing false about the results, if you slice the data such-and-such a way you will get their claimed result. And even if there are no other employees or contractors or students quietly omitted and we take everything at face value, he hasn't shown that they aren't counted in the coin-flipping orangutans given a loaded coin producing 7% returns a year. Why aren't his former coworkers giving away dozens of billions of dollars? If they were beating 7% like he says they were, they should - in 2012, 28 years later - be sitting on immense fortunes. Buffett himself seems, these days, to generate a lot of Berkshire profit just from being so big and liquid, in selling all sorts of insurance and making huge purchases like his recent railway purchase.

I don't think that even begins to overturn efficient markets, sorry.

Speaking of Buffett's magical returns, I found http://www.prospectmagazine.co.uk/economics/secrets-of-warren-buffett/ interesting although I'm not competent to evaluate the research claims.

Out of curiousity, are you enough of an EMH'er that you don't believe in mispricings? Or at least not in publicly traded financial securities markets?

Pretty much. I believe in inefficiencies in small or niche markets like Bitcoin or prediction markets, but in big bonds or stocks? No way.

It may be no easier to exploit than the other kinds of mispricings, but it is probably not harder to exploit.

I have watched countless people, from Paulson to Spitznagel to Dr Doom to Thiel, lose billions or sell their companies or get out of finance due to failed bets they made on 'obvious' predictions like hyperinflation and 'bubbles' in US Treasuries since that housing bubble which they supposedly called based on their superior rationality & investing skills. It certainly seems like it's harder to exploit. As I said, when you look at complete track records and not isolated examples - do they look like luck & selection effects, or skill & sustained inefficiencies?