Re: UKNM: More overvalued stocks

[Clay Shirky]

> 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.


-clay 

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