He interprets the definition of an efficient market as one that immediately represents all that is theoretically knowable about a security by the present time. Using this literal interpretation, everything that is knowable includes solutions to NP-hard problems. In fact he could have used it to show much more. If the price represents all that is knowable by the present time, than that means than not only all information is processed in zero time, information must travel instantly. He could have just as well claimed that for markets to be efficient information must travel faster than the speed of light.
The definition of an efficient market actually means that that the price of a security at time T represents all that market players can deduce about its history by time T, using information travel and processing speeds that market players possess. It really just means that everything that is historically known about the security can and will be used to determine its price as fast as possible. If it isn't possible - it won't determine the price.
The definition of an efficient market actually means that that the price of a security at time T represents all that market players can deduce about its history by time T, using information travel and processing speeds that market players possess. It really just means that everything that is historically known about the security can and will be used to determine its price as fast as possible. If it isn't possible - it won't determine the price.