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Meaning of Efficient Markets
jason375 03-31-2006, 8:40 AM | Post #171682 | 
I was reading the blog at the web site of financial expert Rob Bennett (hocus.) He says:

The market through which cars are bought and sold is efficient. In fact, it's so efficient that it offers rewards to those who go to the trouble of checking prices at a number of dealers before making a buy decision. Those who feel an emotional need to obtain a car immediately pay a price for their lack of patience.

This was discussed in a previous thread. Some of us didn't think the car market was all that efficient. I am pretty sure I can buy a stock for the same price at different discount brokers. Is that market efficiency?

He goes on to say:

Think of how things work in the stock market. That market is efficient in many ways too, is it not? Yet the investor who ignores valuations can hardly expect to obtain the same long-term returns as the one who waits patiently for stocks to be offered at a reasonable price, right?

It seems to me that the fact that stocks may vary in price doesn't mean that the market is inefficient.

He goes on:

It's not only in the stock market that being informed about valuations pays off big time. That's true when buying a car too. Actually, what works when buying stocks works when buying just about any other product or service available for sale in this consumer wonderland of ours.

Those who seek value are able to stretch their earnings farther than those who do not. That's why some middle-class workers are able to win their financial freedom many years sooner than others. Obtaining good value for your money matters.

So is there some "consumer reports" or "blue book" where I can find the intrinsic value of stocks? I want to "win financial freedom" dose that mean I have to stay out of the market until prices are right?

Originally posted in thread: 49180
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