[squiffy]

Certain facts are very precise. NOK last year earned say $1 per share. Assuming there was no accounting fraud, that is a precise verifiable fact that persons trading the stock can incorporate into their decisionmaking.

But remember, not everyone who trades even considers that information. Do you read the annual and quarterly reports for all stocks you buy? Are you 100% aware of all current info about your stocks? Do you incorporate them into your purchase.

Don't assume that everyone in the market has perfect info. And don't assume everyone in the market cares about fundamental info. Many short term traders don't care about fundamentals or long-term considerations. So they are not necessarily even factoring in any long or medium term info.

Other possibilities are almost impossible to accurately predict or quantify. So if the financial impact of hurricane Katrina is difficult to predict a month beforehand or even a week afterward, how can you assume that the market will incorporate the info, when the info is uncertain and unclear, there is really little that the market can incorporate.

Many believe the strong form of the efficient market hypothesis is simply wrong.

And even the strong form of the efficient market hypothesis does not necessarily assume that the market can accurately predict the future.

Has the market fully incorporated all current information about the Avian Flu virus.

Even if you assume it has incorporated that info, what is that info?

A 5% chance that 50 million will die. A 1% chance that 100 million will die. A 90% chance that 1 million will die. And all of those estimates based on guesswork. Somethings are just very difficult to predict, so there is no hard fact to incorporate.

Now if NOK says today that it looks like it's earnings for the third quarter will be down by 20%, then that is a more precise fact which can quickly and easily be incorporated into NOK's valuation, assuming you are a trader that cares about valuation. THough not all traders will calculate the same valuation, even based on the same information.

The market quickly adjusts to new info. But the market can be wrong because individual traders might ignore that info, might make incorrect calculations based on that info, or might NOT be able to make any accurate predictions because the info is too uncertain.