After the release of his paper CAPM: An Absurd Model, Pablo Fernandez (University of Navarra, IESE Business School) received 233 comments, so he has issued a revised version. The paper skewers the capital asset pricing model (CAPM), saying its “assumptions and its predictions/conclusions have no basis in the real world.”
Most agree: Over three-quarters (78%) of the commenters agree with the term “absurd” to describe CAPM. “I thank them all very much,” Fernandez writes. “I have learned a lot reading (and thinking about) their opinions: real opinions of real persons that know finance and have thought about the CAPM, the market return, the beta, the market risk premium.” He collected the comments, criticisms, and suggestions and published them as a separate paper.
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