Can markets be accurately modeled and thus predicted?

Not this again. No -- the answer is no. The behavior of a fair market cannot be predicted. Only unfair markets work that way, for example markets sullied by insider trading.

Here is the proof -- the "The Wall Street Journal Dartboard Contest":

http://www.investorhome.com/darts.htm

A quote: "The pros barely edged the DJIA by a margin of 51 to 49 contests. In other words, simply investing passively in the Dow, an investor would have beaten the picks of the pros in roughly half the contests (that is, without even considering transactions costs or taxes for taxable investors)."

What does it mean that investing in a market average fund does as well as hiring a professional investment counselor? It means the market cannot be predicted and investment counselors are making promises they cannot keep.

The only predictable markets are those that are rigged in some way, that break the rules, or the law.

There is a theory which states that if investors ever do manage to accurately model and predict market behaviour, the markets will vanish and be replaced by something even more inexplicable.

There is a further theory which states that this has already happened. Repeatedly.

--- bastardisation of a Douglas Adams quote.