Archived Blog Post: November 1, 2000

Rational irrationality - "Markets are "rational" in the sense that investors' behavior is directed toward their self-interest and they will generally make reasonable choices to promote that interest. The problem occurs when the word 'rational' is used as a substitute for 'efficient,' or to suggest that stock price should conform to other measurements of the value of a company. Often stock prices will reflect these external value measurements, but only when investors are collectively possessed by the belief that it should. "

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