3 ms·

Warren Buffet also said: "I’d be a bum on the street with a tin cup if the markets were always efficient”

• refurb 13y ago
  I think one particular problem with the strong-form efficient market hypotheses is this: A stock should already be priced for all of the publicly available information. However, that information has to be analyzed and interpreted. That's the catch. "Today company XYZ announced their purchase of Chinese company ABC." There are probably many different ways to interpret that information. Maybe the purchase will result in increased profit, maybe it will bankrupt the company. Nobody knows. If all public information were easily interpreted, i.e. if X happens the stock will drop by 5%, then the markets probably would be efficient.
  • jacques_chester 13y ago
    The EMH doesn't propose that participants have future knowledge. It says that current prices reflect current information and that in the long run, all participants regress to the mean.
    • eli_gottlieb 13y ago
      Well yes, but he's still correct. Not all participants accurately gauge what the available information means for their positions, and even for those who do, figuring it out takes time.