Investing - Theory, News & General • Efficient Market Hypothesis clarification

This is more of a hypothetical example just to understand the practical implications of the concept a bit better. The best advice, of course, is to buy and hold passive index funds that track the market. It may not seem like it, but I'm looking for a strong, fair, convincing argument why I'm off the mark, if I am. Think of this post more as a student of religion asking a question of scripture to a religious authority as opposed to me making a strong claim. The fine Boglehead folks would have the best shot of explaining this better.

EMH would appear to claim that $1,000 of Berkshire Hathaway stock would offer the same risk-adjusted expected returns as $1,000 of Lululemon and that they are both therefore equally fairly valued.

This sounds very digestible, at first, until I think about all the inherent implications.

Endless implications here: The market has nearly efficiently and near perfectly priced in...:

-Warren Buffett's age, life expectancy, expected continued cognitive function, and transition out of Berkshire, and weighted impact on all future decisions.
-Greg Abel's full scope of abilities and potential weaknesses and full impact, and his limit of impact, on BRK holdings.
-All of the holdings of BRK and a full analysis of each of it's business's weighted projected future proftability, growth, etc.
-Lulu's brand perception among the public, and the rate of this brand depreciation among different segments of the population, which would result in accurate models of future profitability.
-All of the historical data of prior brands, and stocks, that have faced headwinds and their ability (or lack thereof) to overcome
-Probability of interest rates hikes and how a possible interest rate hike could possibly affect BRK and every single one of its holdings, weighted vs how it could affect consumer's propensity to retail shop a brand that may or may not be in a certain rate of decline.
-Full knowable knowledge of the impact of the current administration's war(s) and how it would impact Coca Cola vs. Lulu
-...a nearly infinite (or probably infinite?) additional set of considerations that could have a potential impact on the comparison of these two companies.

Perhaps many of these are unknown and are not knowable, or perhaps they are not important. But EMH would seem imply that the market nearly perfectly knows everything it knows and nearly perfectly knows what is unknowable or irrelevant.

That there is no computer system combined with a group of brilliant individuals who can know just a little bit more than what the overall market knows, and exploit this knowledge to make bets that have a slightly better chance of expected risk-adjusted returns when compared to the market. If they did, well the entire market would know and there would be so much money pouring in or out that the edge would dissolve. This seems unlikely that there's seemingly endless liquid money that can almost always effiencivize (word?) a non-efficient asset and that the market can always perfectly know what system knows a little more than the all-knowing market.

Please fix me.

Statistics: Posted by Minimumbeginningend — Tue Sep 01, 2026 8:13 am