#1 – Media decides what to report
You learn about uprising in Libya because the media reported it. You learn about earthquake in Japan because it is reported in the papers. It is impossible to report everything under the sun on any given day. Media prioritizes the news which they think would attract the most eyeballs. Likewise for finance and business news. They report what they think you are interested to know. Hence, you can only know as much as what the media reports.
#2 – Inequality in social networks
Some people are more sociable than others. Some build a vast network of friends. Network itself is capital. The more people you know and the more people know you, the wealthier you are. This is because you leverage on the relationships for certain advantages. If you have good connections with certain company employees or fund managers, you get information that others may not have. Of course, EMH would say that because somebody would have entered the market and removed the profits before anyone could. I agree. But others may still act on the information even after the market has priced in, and caused the market to be unbalanced again.
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We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
#3 – Delay and accuracy in transmissions
Related to the above point, there is always delay in information flow. Take a look at information flow within your company. When a new policy is being promulgated, how long does it take for everyone in the company to know about it? Moreover, information and meaning can be lost during the transmissions. You should be familiar with the variety game shows where each player has to pass down a message to another player and to subsequent player. The last player has to regurgitate the original message as much as possible. We have a good laugh when the intended message was completely distorted.