Markets are not efficient, they are sentimental, driven by emotion, groupthink and momentum. The only defense of efficient market theory is in the difficulty of making returns in the market. This is not because all the information available about stocks are priced in and therefore the markets adjusts to that reality; it is due to all the economic systemic events that are disruptive to the system, which is further induced by market volatility. Noise is a crucial concept in markets. Fundamentals should drive markets. Noise is anything that is perceived to impact an instrument. The resilience of specific stocks should not be overlooked.
Concept of ‘noise’ in markets
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