The Astonishingly Inefficient Market

One of the themes we keep coming back to is the so called efficient market hypothesis. We simply don’t buy into the near religous belief that markets are perfect, omniscient processors of information.

Instead, we find markets are eventually, mostly, kinda efficient. They very often miss what in hindsight is obvious. Its why prediction markets’ value are often limited.

Today’s example comes from a NYT article about ENRON, the biggest ever corporate bankruptcy in the United States.

>
click for enormo graphic

26enron_graphic_lg

graphic courtesy of NYT (for an even more enormous graph, click here)

>

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 . . . 

>

Source:
Big Test Looms for Prosecutors at Enron Trial
KURT EICHENWALD
NYT, January 26, 2006
http://www.nytimes.com/2006/01/26/business/businessspecial3/26enron.html

Category: Apprenticed Investor, Markets, Psychology, Technical Analysis

TA Infiltrating Everywhere!

Category: Technical Analysis

“Priced out of Brooklyn”

Category: Data Analysis, Earnings, Economy, Real Estate

Top Ticking Real Estate is Different Than Stocks

Category: Investing, Markets, Psychology, Real Estate, Trading

The Perils of Forecasting

Category: Financial Press

Equity Extraction Fades, What Happens As As Home Sales Slow?

Category: Economy, Real Estate, Retail

Hot or Not? Sector Analysis and the Tipping Point for Oil

Category: Commodities, Markets

Earnings Continue to Soften: J&J

Category: Earnings

Crude Production by Country

Category: Commodities

Oil and the Markets

Category: Commodities