Does Instant Information Promote Market Efficiency?

by Ravi Nagarajan

I have been reading the updated sixth edition of Security Analysis from cover to cover and on more than one occasion, I have stopped to consider the major advantages modern day investors have compared to Graham and Dodd. Investors today have access to a wealth of information that Benjamin Graham lacked during his career. However, more widespread information also would theoretically lead to more market efficiency and reduce opportunities to find mispriced securities. Is it true that the market is more efficient due to the widespread dissemination of information made possible by the Internet and other technologies that have emerged in recent years?

If one considers the sources of information available to investors operating fifty years ago, it is obvious that there were many more hurdles standing between an investor and the knowledge required to make intelligent investment commitments. In fact, the situation was not all that different even 15 to 20 years ago before widespread access to the Internet. I remember spending hours in the library researching publications on microfiche, using card catalogs to find books, and sending out for annual reports when I first started to develop an interest in investing. This was not fifty years ago, but during the early 1990s.

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