I’m with MH. Efficient markets means all information about the markets and each stock is available to all investors, so the price of each stock is precise and accurate.

I don’t buy it though. Why did homebuilders go up recently? Why are some stocks trading at PE/s over 15? Why was there even a tech bubble, with stocks earning no profit trading at high prices?

I don’t believe in efficient markets. None of the current pricing makes any sense to me. Besides, some companies play with the numbers too. Fleck had an example of a company that came out with just-before-closing-bell earnings warning which made the stock take a hit, and then in the thinly traded after-hours market they announced they would have a much better year going forward, making the stock rise again. We also have shorting and options and all kinds of trading which further distorts the true value, as those people treat the market like a casino table, rather than being true investors which pay for a stock what they think it is worth. They are buying only for short term holding to play small changes in the price.

Maybe markets were efficient before all the games and the before the speculators took over.

To me, the stock market does not reflect the accurate value of a company’s stock. It just shows what a bunch of speculators are willing to game it for, at this moment.