MH – you are correct. It is all about how prices adjust. I say it adjusts to make supply = demand, the theory says it adjusts to take into consideration all information. Pretty much the same thing, but I’ll stand sort-of correctd.

Still – just because the stock isn’t doing what powayseller thinks it should do doesn’t mean it is inefficient.

In your terms – the stock price reflects ALL the information available to all investors, not just the information available to powayseller.

Also consider, the same information can be interpreted differently by different people. Some may be in a position to be very hurt by falling interest rates. Such an investor may consider going long on builders as a hedge.

Just so you know – I am currently short on builders.