Psy and John, I think the idea is this: if you want to buy a hundred shares of OB at ten dollars each, because you think it’s going to go way up, you have to buy them from someone else who’s willing to sell at that price. But clearly that person does not likewise think that the price of OB is going to go way up, because if she did, why would she sell it to you now, at the current price? So in an efficient market, situations where everyone agrees on the future movement of prices simply don’t occur. If everyone thought the price of OB was going to go to thirty dollars a share, then said shares would already be trading at thirty (modulo expectations about interest rates, inflation, &c.).
Psy and John, I think the idea is this: if you want to buy a hundred shares of OB at ten dollars each, because you think it’s going to go way up, you have to buy them from someone else who’s willing to sell at that price. But clearly that person does not likewise think that the price of OB is going to go way up, because if she did, why would she sell it to you now, at the current price? So in an efficient market, situations where everyone agrees on the future movement of prices simply don’t occur. If everyone thought the price of OB was going to go to thirty dollars a share, then said shares would already be trading at thirty (modulo expectations about interest rates, inflation, &c.).