efficient market hypothess

A discussion of “the” efficient market hypothesis came up.

I don’t find “efficient market hypothesis” a very useful term without qualification, because its variants range from approximately “the market is smarter than any single participant” (which apparently some people believe even though there are famous counterexamples) to “given enough time, the market tends to correct major misvaluations” (proof: “Things that can’t go on forever, don’t.” — I’ve only seen this attributed to Herbert Stein).

Original version, March 2010.
Updated and added here November 2011.