Do Financial Markets Operate Upon Superior Knowledge?

Financial markets are various individuals engaged in the buying and selling of financial assets. Most of the time, the actions of market participants are driven by popular ideas. If the decisions taken by the market participants are based on a theory which is detached from reality, then the direction of the market is likely to follow the theory. Conversely, if the market participants were to follow a theory that corresponds to reality, then the market is most likely going to reflect this.