8. Market efficiency implications (S12.3) Two financial managers, Alpha and Beta, are contemplating a chart showing the actual performance of the Standard and Poor’s Composite Index over a five-year period. Each manager’s company needs to issue new shares of common stock sometime in the next year.

Alpha: My company’s going to issue right away. The stock market cycle has obviously topped out, and the next move is almost surely down. Better to issue now and get a decent price for the shares.

Beta: You’re too nervous; we’re waiting. It’s true that the market’s been going nowhere for the past year or so, but the figure clearly shows a basic upward trend. The market’s on the way up to a new plateau.

What would you say to Alpha and Beta?