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Thoughts On Things Being Priced In To The Market.

I often hear this discussion of whether or not something is "priced in" to the market. Perhaps this has to do with proprietary models pertaining to discounted cash flows and the like, and what rates those cash flows are discounted at, relative to market rates etc, in computing cost of capital and hence security prices etc etc etc.

At the risk of looking like a dope, I sometimes think to myself, that this is one of those claims that's very difficult to substantiate. Theoretically I wonder if one could back this sort of claim up by noticing smaller total residual values relative to some sort of like adjusted beta that occurred throughout a basket of specific securities in a market, and whether this finding could be a trend or simply a pattern per se.

I also wonder if this is kind of a chicken and the egg sort of argument. Do people say, oh look, the beta of all stocks is now slightly off, and this phenomenon occurs generally speaking across the whole market, and hence people presume something is priced in, or is this something else?

All the stocks that I've been watching are still showing the same sort of behavior that they did before Q3 being "priced in", and just from a functional perspective, if lets say some sort of beta, has been adjusted, or people are adjusting price levels to new money supply/ invest rate levels, according to possible new risk free rates, that certainly doesn't have as tangible effect on the stock market and securities in general, as does one single piece of positive or negative news out of Europe.

Hence, in times like these, I wonder if this sort of perspective is like noticing an increase in static electricity in the air, during a sever thunderstorm. Whereby its the lightning that's more important, and even if one can study the levels of static in the air, is it really as prescient as the more profound factors pertaining to future, stock prices, which would hence be somewhat unknown, and or based on speculation given that they are based on future monetary agency announcements(in general).

I guess one could sum the raise/lower interest rates perspectives in Europe, or pro/against bailout perspective, and try to price that in as well, and though that's simply creating another sort of arbitrary model, that would be at best a rough approximation for the future, would that perhaps be a more prescient approach to the "pricing in" phenomenon?

I'm interested to know what others on this site, and others in general think of this "pricing in" theory, and whether or not they think its actually kind of a prescient observation(the pricing in phenomenon), or if its mostly just like an artifact of some sort of human tendency to want to see patterns or meaning where there is just random correlation(regardless of statistical thresh-holds).

Thanks in advance if anyone posts there thoughts.