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Comment by weatherlight | Hacker News Reader

Spoiler alert: The market has never been rational.

The market is so irrational that the most profitable businesses with the highest profit margins and scalability and highest barriers to entry have the highest market capitalizations.

Spoiler alert: there's a decent argument to be made that the market has never been irrational either. It's just a matter of timing to allow the markets to adjust. A market in of itself is never perfect.

Rationality is binary.

the very occurrence of speculative bubbles, (to be pedantic; where asset prices soar well beyond their intrinsic values and eventually crash) is a strong argument against market efficiency.

Then if markets are always non-efficient, but they "work", I'd argue that they aren't irrational, they are simply quite rational in doing their overall job over time.

I think you are confusing efficiency and effectiveness. Markets, when regulated, can be an effective way to distribute goods and services.

Equity markets tend to be reasonably efficient - we can debate the extent of the efficiency and how exactly we define things like "weakly efficient" etc.

How do you know the "intrinsic value" of share? In most cases that is inaccessible.

Disagree. Nobody is perfectly rational. So if you make rationality binary, then everyone and everything is irrational. That's not a useful definition.

It's more useful to notice that, while everyone and everything is irrational, some are far more irrational than others. That is, it's much more useful to not consider it a binary.

It's not, but individual investors can still be rational.

Can they? If it's possible, I don't think it's the rule.

At least it used to have the decently to play-act at being so.

Hah, when? It's always been a random walk.

The market used to crash, people used to be able to afford houses without going into proto-slavery. Thousands of people used to enter a single store on black friday. We used to be a country.

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