This part of the paper seeks to analyse the Jensen argument in 1978, quoted by Pike& Neale that the efficient market hypothesis is the "best established fact in all of social science". Whilst Neale & McElroy (2004) were less categorical "sometimes stock market valuations may look irrational. But in the longer term the markets are efficient processors of information and get valuation about right"
Numerous papers have demonstrated that early identification of new information can provide substantial profits. Insiders who trade on the basis of privileged information can therefore make excess returns, violating the strong form of the efficient market hypothesis. Even the earliest studies by Cowles (1933,1944), however, make it clear that investment professionals do not beat the market. It has already been stated that an efficient market is one where the prices of securities fully reflect all available information, but then what are the sufficient conditions for capital market efficiency In an idealized world, such conditions would be
the debate about market efficiency has resulted in thousands of empirical studies and literature attempting to determine whether particular markets are in fact 'efficient', and if so to what degree. ...