(FORTUNE Magazine) – Is the efficient market hypothesis really on the ropes? Did the crash on Black Monday discredit EMH? Was FORTUNE on target last fortnight in basically proposing affirmative answers to these questions (''What Makes Stock Prices Move?'')? And speaking of market efficiency, is it really possible to beat the point spread in pro football as thrillingly alleged in the September Journal of Finance?

Being still among ''the faithful'' (the FORTUNE article's characterization of believers in EMH), your correspondent was naturally hoping to find that the spread could not be beat. The existence of any profitable system in the enormous football betting market (estimated annual wagers in both legal and illegal markets: $16 billion) would imply market inefficiency and give aid and comfort to the faithless. An efficient market is one in which all known information is instantly reflected in prices. This makes it hard to find bargains. An efficient market at all times offers an informed, unbiased estimate of values. But since much of the information it's assimilating is conjectural and probabilistic, the estimates aren't necessarily ''right'' and are endlessly changing. This is why we are unimpressed by folks who cite last year's crash as evidence that EMH is all wrong. A crash would be entirely consistent with an efficient market in which investors, lacking experience in the new global stock market and hearing ominous reports about possible currency wars, suddenly and sharply raised the risk discount on stocks. Viewed from a distance, the football market seems quite efficient. At the beginning of each week, the market-makers in Las Vegas propose a so-called opening line, which represents their effort to name a spread that will result in an equal volume of bets on both teams. The opening line is typically adjusted somewhat during the week, as the bets pour in and Vegas keeps trying to ensure equal bets on both teams. A ''matched book'' means a guaranteed profit for the bookies, who basically collect their 10% vigorish by paying the winners $10 for every $11 they collect from losers. It seems hard to believe, but the Journal of Finance article, written by three scholars at the University of North Carolina at Charlotte and one at the University of Connecticut, says there are betting systems that can beat this market. Lacking space to take you through the authors' data and reasoning, we will settle for noting three betting rules that would have been generally profitable in recent years. All three assume the betting public to be somewhat crazy: (1) Keep track of the betting line during the week before the game, and bet on the team that becomes less favored (or more of an underdog) during the week. In other words, bet against the public -- the guys who are causing the line to change. (2) If the public does perchance have a ''winning week'' -- defined as one in which a majority of the line changes correctly anticipated the winners -- bet against the public the next week. (3) Any time a favored team wins and covers the point spread by ten points or more, bet against it the following week if it is again the favorite. How could these strategies have worked for so many years? (Whether they will work in the future is of course unknown.) The authors conclude that they worked because ''the pool of money bet by the unsophisticated public dominates the pool of money bet by knowledgeable handicappers.'' This is clearly not the case in the stock market, however, so we do not concede that the Journal of Finance data is bad news for the Wall Street version of EMH. Anyway, it has never been proven that stock-market investors are crazy.