@article {Bell55, author = {Holly A. Bell}, title = {Velocity of Information in Efficient Markets: A Theory of Market Value Change }, volume = {21}, number = {3}, pages = {55--59}, year = {2012}, doi = {10.3905/joi.2012.21.3.055}, publisher = {Institutional Investor Journals Umbrella}, abstract = {This article argues that market prices in contemporary financial markets are driven by the value of information multiplied by a factor of the information{\textquoteright}s velocity. These factors combined have the potential to explain several observed market phenomenon, including market volatility during economic crisis or recession, market bubbles, flash crashes, and short-run volatility combined with overreactions and over-corrections. The theory considers both micro and macroeconomic information, and questions the assumption that market prices always reflect intrinsic value alone. While microeconomic information is helpful in determining a security{\textquoteright}s intrinsic value relative to other securities, macroeconomic information impacts the aggregate market. The result of our contemporary high-velocity information environment suggests our financial markets are becoming informationally hyperefficient and quasi-rational. This hyperefficiency has the potential to create short-run volatility on a scale not previously experienced.TOPICS: Volatility measures, exchanges/markets/clearinghouses, technical analysis}, issn = {1068-0896}, URL = {https://joi.pm-research.com/content/21/3/55}, eprint = {https://joi.pm-research.com/content/21/3/55.full.pdf}, journal = {The Journal of Investing} }