[HangnJudge]

My daddy always said that the worth of an equity was defined as half the money saying it was going to go up and half believing it would go down.

In an efficient market, all information is very rapidly factored into an equity
worth and, unless you have real-time awareness of changes in information,
you cannot predict the future direction of markets efficiently.
Subsequently, stock picking for amateurs is an inherently difficult task

[MichaelP]

We do have almost real time info when it comes to commodities, particularily oil. There is a causal relationship with the equities market that you can plot. The curve has been very late with regard to this spike in oil. However, that has been because of the super low long term interest rates. With the hike today by the fed, and the appreciating of lonng rates over the last month, things look to realign. Economic law like physical law, doesn't change per whim....

Mike

[GregoryFul]

A casual look at the daily movements in stock prices would tell you that equities are not "efficently" priced. 5-10% movements are common, without any news to digest. Many stocks of companies in the same industry, with similar earnings growth, profitability, etc. are priced at wildly different PE ratios. In an "efficient" market, one would expect them to be closely priced in terms of PE's - if you are buying an income stream. There are public companies out there right now that are profitable and are paying astronomical dividends (18% - DAGM) but are declining in price, while there are companies that are loosing year after year, paying no dividend, and are soring in price (ELN).

The theory doesn't apply in the real world.