An Important Flaw of the Efficient Market Theory

"The same finance scholars who claimed that you couldn't predict future stock price movements by looking at past stock price movements were embracing the idea that future stock volatility could be predicted by looking at past stock volatility."

From The Myth of Rational Markets by Justin Fox

This theory is the cornerstone by which the consultant industry advises institutional investors. The theory, despite the above mentioned flaw in logic (and many other flaws) will be around for some time to come because 1) it provides a C.Y.A. blanket for institutional fiduciaries and 2) a lot of consultant and academic paychecks depend on it.