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


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 . . . 


Big Test Looms for Prosecutors at Enron Trial
NYT, January 26, 2006

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