"AT 13.16 British Summer Time on July 11th, traders watching the “All News” page on their Reuters screen would have seen 21 headlines flash up. That would have given them less than three seconds to absorb each item—always assuming, of course, that they had finished reading the 16 stories that appeared at 13.15.
So when one starts to wonder why investors were so slow to wake up to the problems of the subprime mortgage market, information overload has to be a factor. An economist, Fischer Black, described this information as “noise”; investors trade on the back of it even though it has no value. The trouble is that it is very hard to distinguish noise from useful pieces of data.
All this confirms what most investors who lived through the dotcom bubble must feel: investors are not always rational and markets are not always efficient. But, judging by the subprime saga, spotting those irrational moments is no easier than it ever was."