The efficient-market hypothesis is nonsense. Markets are driven by humans, humans are irrational, thus markets are irrational.—-Hugh Young, Aberdeen Asset Management
This quotation comes from a longer opinion piece on FT.com. The behavioral component of markets generally swamps the fundamental component—the same fundamentals are viewed very differently during periods of optimism or pessimism. The upside of irrational markets is that rational investors with good tools and discipline are able to take advantage.