Eugene Fama identified three levels of market efficiency:

1. Weak-form efficiency

Prices of the securities instantly and fully reflect all information of the past prices. This means future price movements cannot be predicted by using past prices. It is simply to say that, past data on stock prices are of no use in predicting future stock price changes. Everything is random. In this kind of market, should simply use a "buy-and-hold" strategy.

2. Semi-strong efficiency

Asset prices fully reflect all of the publicly available information. Therefore, only investors with additional inside information could have advantage on the market. Any price anomalies are quickly found out and the stock market adjusts.

3. Strong-form efficiency

Asset prices fully reflect all of the public and inside information available. Therefore, no one can have advantage on the market in predicting prices since there is no data that would provide any additional value to the investors.

Most of the finance profs believed in #2, it seemed. And yet, the starting salaries for new MBAs on Wall Street were about $45,000, while run of the mill MBA jobs started at $30,000. But, the Wall Street premium had been narrowing in recent years of low prices and stagnant trading volumes and the growth of low commission mutual funds. So, the notion that Wall Street was becoming efficient and thus less inordinately profitable seemed plausible.

Then, in August 1982 that all changed when the Fed goosed the money supply and the Long Boom (mostly for Wall Street) began.

Still, perhaps it's worth taking seriously the logic of Semi-Strong Efficiency: "Therefore, only investors with additional inside information could have advantage on the market." Lots of Wall Street guys have made outsized profits over the last 31 years. Maybe some of them had inside information, just as the EMH would imply? Maybe the growth of surveillance had something to do with it?

After all, lots of Hollywood bigshots paid detective Anthony Pellicano to bribe phone company employees and cops to listen in on the phone calls of his clients' rivals and enemies. London tabloids hacked into the voicemails of celebrities routinely. How do we know this hasn't been common on Wall Street too, perhaps also using higher tech means such as back doors to telephone metadata and data mining looking for interesting patterns?