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> You're basically saying that whatever the price is, the market is right. No, the efficient market hypothesis states that asset prices reflect all current ava
by smcphile 6y ago
> You're basically saying that whatever the price is, the market is right.
No, the efficient market hypothesis states that asset prices reflect all current available information. OP is not defending that hypothesis in their message, they’re just saying stock prices reflect expectations about the future, a much weaker assertion. Those expectations might turn out to be wrong, for various reasons, but they’re nevertheless what motivated people to invest in stocks rather than doing something else with their money.
- grumple 6y ago> the efficient market hypothesis states that asset prices reflect all current available information. Obviously interpretations of that information could differ... and some will be right, and some will be wrong.
- smcphile 6y agoSure, individual evaluations of all currently available information can and do differ. The efficient market hypothesis is about the sum total of all those individual evaluations adding up to a rational evaluation as reflected in asset prices. Not everyone believes in the efficient market hypothesis, Warren Buffet being a famous example of someone who does not.
- camelite 6y agoOf course he doesn't. His existence invalidates it.