In the world of economics there is a concept called Perfect Information. It refers to the idea that in some markets you can assume everybody has the same information. For example, the market value of a publicly traded stock rarely changes by large amounts from one transaction to another. The stability of the system depends on disclosure of significant events or information that could affect a company’s ability to meet their projected targets for sales and profits.

Economists try to simplify their theories of market relationships by assuming everybody has equal access to information about any given company. I’m not going to pretend to be able to explain why this simplifies their analysis. But one thing is clear - the Perfect Information assumption is becoming more accurate with each new online tool available - and not just for investors. Continue Reading »