$[$Related to the Apply the Concept: $"$Do the Stock Market Fluctuations During the Covid$-19$ Pandemic Disprove the Efficient Markets Hypothesis?"$]$ A columnist in the Economist argues

that the efficient markets hypothesis has been "dealt a series of blows" because $"$in the late $1990$s dot$-$com companies with no profits and barely any earnings were valued in billions of dollars; and in

$2006$ investors massively underestimated the risks in bundling together portfolios of American subprime mortgages."

Explain how the incidents this columnist discusses may be inconsistent with the efficient markets hypothesis.

The efficient market hypothesis assumes that stock prices will reflect

$.$ During the dot$-$com bubble

$,$ while in $2006$ investors ended up massively underestimating the risks of subprime

mortgages since

$[$Related to the Apply the Concept: $"$Do the Stock Market Fluctuations During the Covid$-19$ Pandemic Disprove the Efficient Markets Hypothesis?"$]$ A columnist in the Economist argues

that the efficient markets hypothesis has been "dealt a series of blows" because $"$in the late $1990$s dot$-$com companies with no profits and barely any earnings were valued in billions of dollars; and in

$2006$ investors massively underestimated the risks in bundling together portfolios of American subprime mortgages."

Explain how the incidents this columnist discusses may be inconsistent with the efficient markets hypothesis.

The efficient market hypothesis assumes that stock prices will reflect

During the dot$-$com bubble

mortgages since

$106$ investors ended up massively underestimating the risks of subprime

their fundamental values

the return on $10-$year Treasury notes

$[$Related to the Apply the Concept: $"$Do the Stock Market Fluctuations During the Covid$-19$ Pandemic Disprove the Efficient Markets Hypothesis?"$]$ A columnist in the Economist argues

that the efficient markets hypothesis has been "dealt a series of blows" because $"$in the late $1990$s dot$-$com companies with no profits and barely any earnings were valued in billions of dollars; and in

$2006$ investors massively underestimated the risks in bundling together portfolios of American subprime mortgages."

Explain how the incidents this columnist discusses may be inconsistent with the efficient markets hypothesis.

The efficient market hypothesis assumes that stock prices will reflect

while in $2006$ investors ended up massively underestimating the risks of subprime

investors did not collect any information on the profitability of the firms they were buying stocks in

investors knew tech stocks were overpriced but assumed they could resell them for an even higher price

$[$Related to the Apply the Concept: $"$Do the Stock Market Fluctuations During the Covid$-19$ Pandemic Disprove the Efficient Markets Hypothesis?"$]$ A columnist in the Economist argues

that the efficient markets hypothesis has been "dealt a series of blows" because $"$in the late $1990$s dot$-$com companies with no profits and barely any earnings were valued in billions of dollars; and in

$2006$ investors massively underestimated the risks in bundling together portfolios of American subprime mortgages."

Explain how the incidents this columnist discusses may be inconsistent with the efficient markets hypothesis.

The efficient market hypothesis assumes that stock prices will reflect

$.$ During the dot$-$com bubble

$,$ while in $2006$ investors ended up massively underestimating the risks of subprime

mortgages since

regulators did not require detailed information regarding each mortgage to be released to investors

they saw other investors making money off these investments and followed with the herd