I know this topic has been touched on in a few different threads before, but I think it is worth having its own thread.
There are plenty of quotes out there along the line of "the market is never wrong" etc etc.
From a current share price perspective I can appreciate those quotes, as the current price is what makes up portfolio values.
However taking a view anything longer than the very instant, I think that the market is hugely inefficient.
IMO, this affects both traders and investors.
These are just my musings and as yet are not backed up by any empirical evidence (although perhaps it would make a good honours thesis for me later )
1. The uprise of technolgy has helped increase liquidity, however it hasnt really improved education. Fear and greed are more prevalent now than say 10 years ago 9not that i was investing back then). The Interent has caused a lot more 'herd' like mentalities hence increasing inefficiency, when theoretically liquidity should increase effciency.
2. How is it that stocks within the same industry, with similar structures, earnings (or lack of), books, etc etc can be priced so vastly differently? Inefficiency, one way or another.
3. Stocks that are well marketed seem to perform better. From a theoretical "high horse" view, this shouldnt happen in the market, due to everyone having access to the same information (which doesnt actually happen). Again i think it comes down to investor/trader education.
I could probably go on, but that will do for now.