On Thu, Apr 04, 2002 at 11:16:54AM +0530, Koushik S wrote: > Those who believe that the jury is still out on efficient markets hypothesis Efficient as compared to what? To a utopia you dream of? Or to the kind of government intervention we can see happens?
> As a practising value investor, I see many many instances of ridiculous > valuations of companies (over and under valuation) all the times which can > be turned into avenues of profit. Great. Why aren't you a billionnaire yet? BTW, those who will turn their better information into profit ARE part of the market. > That actually everybody knows as much about > companies and no one has an information edge ? In a free market, the way prices vary depend on the information that is being used. If you refrain from using your information, there will be discrepancy between the price and what it would be. However, by using your information and "turning it into an avenue of profit", you will also affect the price in such a way that the avenue of profit will be lost and your information will not be worth anything anymore. You will need to constantly feed the market with new accurate information so as to continue making a profit. All in all, the approximated fact that no one has an edge in information is a postcondition of a free market, not a precondition of it. Similarly for the approximated equation between price and amortized marginal cost (that, e.g. Marx took for granted), and many other such "equations". Yours freely, [ François-René ÐVB Rideau | Reflection&Cybernethics | http://fare.tunes.org ] [ TUNES project for a Free Reflective Computing System | http://tunes.org ] In its weak form, Utilitarianism sums up as a requirement of observational consistency and behavioral relevance for ethical rules. -- Faré
