The notion that market prices are the result of a plebiscite on competing estimates of fundamental value is far removed from the reality of frenzied trading in modern financial markets. Most participants are preoccupied, not with long-term economic trends and the competitive advantage of companies, but with evolving market opinion and the ephemeral news that passes across the Bloomberg screen.And:
In an efficient market what is 'in the price' is an average of divergent views. But often what is in the price is the manifestation of a common City view, generally held within the Square Mile, but not necessarily well-founded. The New Economy bubble was an extreme instance of widely held perceptions that were also widely at variance with reality.
No one can have live through the New Economy and credit bubbles and still seriously believe that market prices are a balanced representation of well-considered assessments of fundamental values of securities. An understanding of information asymmetry and the winner's curse is more important to an appreciation of modern financial market than the efficient market hypothesis.