By this point, I think I've convinced myself that you can't use market performance to contradict the efficient market hypothesis.
Sorry to continue spinning the ouroborosian loop, but I think you're still just drawing the tautological conclusion that you can't use market performance to contradict market performance.
In essence, the efficient market hypothesis is the idea that market prices are always "correct" -- that the market never "misprices" stocks, because all material information is immediately incorporated into the market price (where "all material information" and "immediately" both vary in degree with the strength of the version of the EMH you happen to be using).
In order for the EMH to have any meaning beyond empty tautology (and in order for it to actually be the hotly contested "hypothesis" it is, rather than an unassailable logical truth), it has to be possible (in theory, if not in practice) for a company to have an
intrinsic value capable (again, in theory, if not in practice) of diverging from its market value. I see incidents like Mississippi Mud's LEXG example (which sounds like it came pretty close to being a real-world BGC story) as evidence contradicting the EMH.
Again, I think the substance behind our difference in semantics is really the same. I agree with the substantive point you are making, which, I think, is the same as what I said way upthread:
Sol's statement (and our two follow-up posts) stated that even if zero inefficiencies exist, irrational investor behavior (or, depending on how you look at it, the rational investor behavior of trying to predict the actions of all the other possibly rational, possibly irrational market participants) can explain market gyrations without needing to resort to the argument that some level of inefficiency exists in the market.
But to illustrate the issue I have with the semantics of your later argument, let's compare the stock market to Wiktionary, the public online dictionary collaboratively written and edited by the people who use it (i.e., the dictionary version of Wikipedia). Like the stock market, Wiktionary can be thought of as a "market" composed of large numbers of rational participants who are constantly analyzing and reacting to relevant information and incorporating that information into itself. To me, your argument is equivalent to saying that Wiktionary cannot be wrong -- if Wiktionary reports the definition of "screwdriver" to be "a tool with a heavy head, set crosswise on a handle, used for driving nails," then that is what the word "screwdriver" means.
After all,
there is no proper English -- words have only the meanings we give them, so whatever meaning the dictionary reader-writers assign to a word has to be correct, right? To tighten the analogy, if the "market" has "valued" the word "screwdriver" at our current understanding of the word "hammer," then that makes it true. Except that "screwdriver" does
not mean "hammer" if the general usage has not changed among the English-speaking public, in the same way that LEXG or BGC are
not worth $200M or $10M if generally accepted measures of intrinsic value have not changed. So, to restate what I said initially, I think you're not really defending the EMH in your last few posts in this thread -- you're just making the (somewhat related) observation that "market value" may be a better standard of valuation than "intrinsic value."
