Should we still belive that markets are efficient and investors are rational?
The answer to this question is really down to this: Do we still believe in the collective wisdom of all of us?
The accuracy of the collective wisdom of all of us is eloquently detailed in the book: The Wisdom of Crowds : Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations by James Surowiecki.
The following video illustrates how betting on the outcome of political contests and indeed any event can result in extremely accurate results simply through the mechanism of prices. This is exactly the same way that markets work.
Larry Swedroe, director of research at Buckingham Asset Management, discusses why we should continue to view markets as efficient and investors as rational, despite what has happened in the past few years.