FT.com / Columnists / John Kay - Markets after the age of efficiency:
"Market efficiency is a hypothesis about the way markets react to information and does not necessarily imply that markets promote economic efficiency in a wider sense. But there is a relationship between the two concepts of efficiency. It has long suited market practitioners and rightwing ideologues to encourage such confusion. Since markets are efficient, they argue, interference in markets is counter-productive and more markets mean more efficiency.....Economic models are illustrations and metaphors, and cannot be comprehensive descriptions even of the part of the world they describe. There is plenty to be learnt from the theory if you do not take it too seriously – and, like Mr Buffett, focus on the infrequent inefficiency rather than the frequent efficiency."