3 ms·
It's a useful hypothesis to use as an ideal, and just because reality is different from the preconditions of the hypothesis doesn't mean it's silly. Sort of li
by pchristensen 19y ago
It's a useful hypothesis to use as an ideal, and just because reality is different from the preconditions of the hypothesis doesn't mean it's silly. Sort of like Newtonian physics.
Also, deviations from situations predicted by EMHhelp identify weaknesses or abnormalities in the real market.
- Retric 19y agoBasically, the 'Efficient Market Hypothesis' and Newtonian physics are both wrong. Markets don't accurately price things to 1/100th of a percent every second thought the day. Stocks go up and down though random chance and bubbles are all too common. A more basic failing of the efficient market hypothesis is the lack of a standard level of risk tolerance. However, as a general rule it is vary hard to significantly beat the market over time and for most real world objects F = M * A.