The multiplier effect is sometimes called 'more efficient' in academic literature because larger price moves in response to information (like earnings reports) indicate faster information processing; however, this is a misuse of the term 'efficiency' because Meta falling 50% on one earnings report and rising 50% on the next is not efficient from any reasonable perspective of capital allocation.
causalpending
Speaker
Dave NodicEvidence Quote
“if prices move, if if a company gets a lower and lower effective float because it is more and more held by passive and therefore when information comes out like an earnings report and that earnings report engenders a giant move because now the stock is basically low float in its characteristic and the active managers who would trade out that information are trading in a smaller pond and therefore causing a larger disturbance. perversely that's called more efficient.”
Source
The Trillion Dollar Trap | Mike Green on Passive Investing's Fatal Design Flaw— Excess ReturnsCreated: 8/11/2026, 5:27:10 AM
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