Allocational Efficiency

Here's the theory: if markets were absolutely efficient, capital would be used in a way that had benefits for everyone—customers, companies, and investors. The idea is that there is a near-perfect balance, where companies make the right amounts of the right stuff using the right techniques, while keeping costs fair, so that customers get what they want at good prices. In the world of optimal allocational efficiency, jobs are plentiful, investors profit, and everyone sits around their dining room tables holding hands and singing "Kumbaya."

Look out the window—we're definitely not there yet, and not just because no one knows the words to "Kumbaya" (we're not sure if you can see people's dining room tables from your window, but you get the idea).