Yes, details depend on exactly what version of EMH you'd subscribe to. I think we mostly agree.
One fairly sensible version of EMH is the notion that even an efficient market pays you to take certain risks. Eg an insurance company might be paid to take weather risk when they insure crops. If there's enough competition, that risk will be efficiently priced.
People can spend extra effort to learn more about crops or the weather, and thus get a better handle on the probabilities and variances. At some point you hit diminishing returns. Different people have different amounts of productivity, ie how much effort leads to how much improvement in understanding of risk. The market price will be driven by the most productive people and companies; because they hit diminishing returns last. (To give a silly illustration: I could spend a lot of effort trying to understand the weather better, but because I have no clue, that effort wouldn't do me much good. An expert will do much better. And so it's the experts who effectively set the price in competition with each other.)
The same applies for credit risks that a bank faces when it makes a mortgage loan.
In an efficient market, the risk for holding SVB stock would be priced efficiently. But you'd maybe want to investigate whether it's the kind of risk you want in your portfolio. Or, if your investigative abilities are at the productivity frontier, you might also want to just check out SVB in general, to see if the market price is slightly off compared to your expert judgement.
One fairly sensible version of EMH is the notion that even an efficient market pays you to take certain risks. Eg an insurance company might be paid to take weather risk when they insure crops. If there's enough competition, that risk will be efficiently priced.
People can spend extra effort to learn more about crops or the weather, and thus get a better handle on the probabilities and variances. At some point you hit diminishing returns. Different people have different amounts of productivity, ie how much effort leads to how much improvement in understanding of risk. The market price will be driven by the most productive people and companies; because they hit diminishing returns last. (To give a silly illustration: I could spend a lot of effort trying to understand the weather better, but because I have no clue, that effort wouldn't do me much good. An expert will do much better. And so it's the experts who effectively set the price in competition with each other.)
The same applies for credit risks that a bank faces when it makes a mortgage loan.
In an efficient market, the risk for holding SVB stock would be priced efficiently. But you'd maybe want to investigate whether it's the kind of risk you want in your portfolio. Or, if your investigative abilities are at the productivity frontier, you might also want to just check out SVB in general, to see if the market price is slightly off compared to your expert judgement.