Efficient Market Hypothesis

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Efficient Market Hypothesis

States that all relevant information is fully and immediately reflected in a security's market price, thereby assuming that an investor will obtain an equilibrium rate of return. In other words, an investor should not expect to earn an abnormal return (above the market return) through either technical analysis or fundamental analysis. Three forms of efficient market hypothesis exist: weak form (stock prices reflect all past information in prices), semistrong form (stock prices reflect all past and current publicly available information), and strong form (stock prices reflect all relevant information, including information not yet disclosed to the general public, such as insider information).

Efficient Market Theory

A controversial model on how markets work. It states that the market efficiently deals with all information on a given security and reflects it in the price immediately. The model holds that technical analysis, fundamental analysis, and any speculative investing based on them are useless. The model has three forms: weak efficiency, which holds that technical analysis is ineffective, semi-strong efficiency, which holds that fundamental analysis is ineffective, and strong efficiency, which states that even insider information is immediately reflected in the security prices. Investors and academics disagree on how well the model works.
References in periodicals archive ?
The results of this study indicate that the EMH does not hold for the Sri Lankan foreign exchange market.
The theoretical foundation of EMH traced back from random walk which was firstly put forwarded by Bachelier in his Ph.
Although stated as a hypothesis, EMH cannot be logically proven nor can it meet any rigorous empirical test without serious reservations.
Allen said,"At EMH Prescient Investment Management the core of our philosophy is capital preservation and the management of downside risk.
3) Other sites of intrathoracic EMH include the anterior mediastinumiand pleura.
The erythropoietic masses are usually asymptomatic, although the presence of EMH within the spinal canal may be associated with spinal cord compression and neurological deficit related to the level of involvement.
Papers, in which the EMH is studied, are grounded in accounting as a foundation discipline, use primary archival sources and regression statistics to gather and analyze data, and contribute to financial accounting (130 papers, or 4%)
The theories and mathematical proofs of behavioral economics were largely spurred by discrepancies between the theoretically rational markets of the EMH, and the messier real world.
Caughey, a lukewarm proponent of EMH, said it was valid in today's case, given that Verizon shares edged down by 0.
In the lead-up to making its meter data communication protocol AMIS DLC available to the public in January 2011, Siemens Energy is working together with EMH metering GmbH & Co.
EMH is a well-recognized phenomenon, the pathogenesis of which is incompletely understood.