I understand what you are getting at, but what I meant (and I should have clarified, my fault) - by actual value, I mean current (i.e. not estimated or anticipated) value - rather, empirical value based on hard evidence (the books, preferably non-cooked version ;) ). The value that companies are traded at does not reflect their current value -- if it did, trading would be kind of meaningless, like placing bets on a finished race.
That said, you are correct - the free market basically determines a "real" anticipated value of a product, even though this value may be inflated or deflated by fear, hype, fake volume, other factors.
Not exactly. The strong-form efficient market hypothesis, for instance, suggests that the value of something in a unregulated and truly public market would fully capture all information in existence about a company.
The market is therefore a reflection of ACTUAL value, not anticipated value. The actual value.
Again this is a hotly debated hypothesis, but what the value of a company on a public market actually means is most definitely up for debate.
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I understand what you are getting at, but what I meant (and I should have clarified, my fault) - by actual value, I mean current (i.e. not estimated or anticipated) value - rather, empirical value based on hard evidence (the books, preferably non-cooked version ;) ). The value that companies are traded at does not reflect their current value -- if it did, trading would be kind of meaningless, like placing bets on a finished race.
That said, you are correct - the free market basically determines a "real" anticipated value of a product, even though this value may be inflated or deflated by fear, hype, fake volume, other factors.
Not exactly. The strong-form efficient market hypothesis, for instance, suggests that the value of something in a unregulated and truly public market would fully capture all information in existence about a company.
The market is therefore a reflection of ACTUAL value, not anticipated value. The actual value.
Again this is a hotly debated hypothesis, but what the value of a company on a public market actually means is most definitely up for debate.