A lot of the disagreement comes about because there are different players in the stock market.
1) Traders who seek capital gains on their shares.
2) Investors who seek return on their money from businesses.
3) Owners who seek control over companies.
The market is a combination of these types. The efficient market theory is the idea that the second group determines all the prices.
(This is not always true. For example, during periods of euphoria, the market is clearly dominated by traders.)
Diversification is the idea that since it is impossible to determine which student in the class will get the highest grades, or which athlete will run faster, or which analyst better understands a business of the economy, it’s better to bet on the average.
Nondiversification/concentration is the idea that students who outperform have certain observable characteristics in common.
Asset allocation is diversification expanded to include more classes. Since asset allocation is becoming more popular, asset classes have started moving together just like most stocks in indexes now move together.
This market efficiency actually makes business inefficient.
Any strategy or edge (alpha) will eventually negate itself and turn into pure volatility (beta) as it becomes more widely applied. This means that to outperform you need either better vision (ideas) or better execution (don’t do stupid things) than average.
There’s probably a lot of money to be made on the failures of human psychology as long as you don’t have as many of those yourself.