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Subject: Re: UKNM: More overvalued stocks
From: Clay Shirky
Date: Tue, 27 Jul 1999 16:03:51 +0100

> Doesn't anybody believe in the theory of efficient markets any more?

Markets are efficient *over time*. The moment of least perfect
information is the day of the IPO, and it is possible to manipulate
that moment of imperfect information in several ways which stop just
short of fraud, one being to intentionally undervalue the asking price
and two to create illiquidity, thus making the stock seem to be worth
a premium of its opening price and ending up with a spike while
preventing short-sellers from getting in on the action.

The efficient markets hypothesis - over the long haul you can't beat
the market - not only doesn't say that there aren't short term
imbalances, it specifically says that the bets on these short-term
imbalances is the very thing that forces the values to converge on the
markets version of truth. The perfect price for freeserve is the price
at which for everyone who thinks it will do better in the long haul,
someone else thinks it will do worse. As long as there are more people
in the former camp, the price will rise, and as long as there are more
people in the latter camp, it will fall.

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  Re: UKNM: More overvalued stocks, Duncan Clubb

  Re: UKNM: More overvalued stocks, Sean Phelan

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