Ah ha! You think you’ve got me, don’t you?
Recall the definition of an efficient market: that all public information is priced in. I never said that prices were fundamentally correct (more on this in the next question). I merely said to be efficient prices must reflect all publicly available information. If the consensus amongst the public (i.e. market participants) is that we’re in a new era of phenomenal growth to which the world has never seen before, then that public sentiment (or more precisely, that economic outlook or forecast) will be priced into stocks (or other financial assets). That overly optimistic sentiment may be ultimately shown to be foolish or short-sighted, but it does not mean that markets are inefficient, or even wrong.