To: Thomas Mercer-Hursh who wrote (27287 ) 7/6/2000 2:50:37 AM From: tekboy Respond to I think an important but unstated assumption of Geoffrey Moore's Living on the Fault Line is that efficient market theory is correct. I mean, remember who the book is directed at: legacy managements. What he means by saying the stock price is an indicator of shareholder value is really, LOTFL as a book-end to Robert Shiller's recent Irrational Exuberance . Shiller assumes the market is not efficient, i.e. that the rise in tech stock and other valuations is not matched by a commensurate shift in fundamentals and therefore cannot be sustained. Moore assumes the opposite. Both books are interesting as far as they go (the Moore much more so for us, obviously), but unfortunately neither really addresses the possibility that its underlying assumption might not always be valid.deserve increased valuations. Both make some good points, but slight or ignore counterarguments. For Shiller, this means missing all the stuff Moore talks about; for Moore, it means missing the fact that often, these days, stock prices are indeed driven by frenzy (positive or negative), at least over the short to medium term, and thus cannot always be used as a real-time gauge of and guide to strategic planning.
