What if we could accurately predict the stock market?

Many of you will have seen the new TV advertisement for the University of Canterbury based around the question "What if ...?"

The "What if" questions include one which asks "What if we could accurately predict the stock market?" The late great Milton Friedman thought of this question more than 60 years before the university. In a letter from Friedman to Don Patinkin, Friedman writes

"Thus in the social sciences the enunciation of a result or law for predicting the stock market perfectly may make that law invalid. For example, if one where to state a technique for predicting the stock market perfectly, you know that if that technique were believed in it would then become wrong."

Letter from Milton Friedman to Don Patinkin, January 18, 1949.

I guess that not too many advertising executives have read Friedman; or Patinkin for that matter.