The Inefficient Market

I just read three articles from The Big Picture about market inefficiency that I found interesting:

  • The kinda-eventually-sorta-mostly-almost Efficient Market Theory” talks about how the father of efficient market hypothesis (EMH), Eugene Fama, has now admitted that “poorly informed investors could theoretically lead the market astray; Stock prices, he noted, could become “somewhat irrational.” This has shift in thinking “has big implications for real-life problems, ranging from the privatization of Social Security to the regulation of financial markets to the way corporate boards are run” according to a quoted Wall Street Journal article.
  • The Hardly Efficient Market” discusses the case of Apple’s (AAPL) stock in the past year. “That’s a perfect example of bad theory costing you money.”
  • The Astonishingly Inefficient Market” looks at Enron as a perfect example of how inefficient the market is. “Where, pray tell, is the efficiency there? The information that Enron was giant fraud was out, and yet the stock took over a year to collapse. Efficient? P’shaw . . . “

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