The author is mistaking why markets trend toward efficiency. The 10% who don't overvalue the equities will have enough money (if not at first, but later as their realism makes them much more profit) to keep the price in line.
Just because 90% of people overvalue something doesn't mean the markets can't be efficient.
She states credible evidence that the market is efficient, then claims that the evidence undermines those who believe in efficient markets... Weak.
"Human Condition" is sometimes a code word for something people don't want you to fix. There are those who have the means to profit from the large scale business cycle certainly want you to think that it has to be this way. They want the forced selling so that they can profit "on the buy." There are those out there who want to blow up bubbles and ride valuations up, then get out before the fall.
Death is inevitable. The inevitability of taxes is propaganda.
Dang, that's kind of profound. Are you quoting somebody?
Over the micro short-term, markets are clearly inefficient, because arbitrage is possible. However, to do arbitrage, you've got to be exploiting opportunities that often exist only for milliseconds. By the time we get to a 5-second time frame, markets are pretty damn efficient, e.g. it's very hard to "beat the market".
Over the long-term (5+ years) I tend to think markets are also "inefficient", to the extent that I believe fundamental analysis works for those who excel at it. Since short-term traders contribute more heavily to efficient markets than long-term value investors, it's plausible that long-run investors can make expectancy in excess of the market average.
In the time horizons that most traders care about, though-- 5 seconds to 5 years-- markets are pretty damn efficient. Efficient markets do not preclude bubbles and crashes, though.
"Since short-term traders contribute more heavily to efficient markets than long-term value investors, it's plausible that long-run investors can make expectancy in excess of the market average."
Why do you think short-term investors create more efficiency than long-term investors?
Even if markets do become more efficent as time-frame grows, that's irrelevant because different people consume wealth at different times (a 20 year old saving for retirement in her 50s will consume that wealth at a different time than a 20 year old saving to buy a house in 5 years), they don't know when they'll consume wealth (the first 20 year old above decided when she was 25 that she really did want kids), and wealth creation over time not only isnt uniform, it isn't known. (The US thinks that it is worth a couple of trillion less today than it thought a year ago. It probably is, but no one knows the actual number at either end-point. Germany, France, and the UK lost a lot of wealth between 1938 and 1943.)