Strong form of the EMT

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Strong form of the EMT

Theory that market prices reflect all relevant publicly and privately available information. Defined by Eugene F. Fama in 1970.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Strong Form of the EMT

The most controversial form of the efficient markets theory on how markets work. It holds that the market efficiently deals with all information on a given security and reflects it in the price immediately. Even insider information is immediately reflected in security prices. Therefore, the model holds that technical analysis, fundamental analysis, and any speculative investing based on them are useless. Investors and academics disagree on how well the model works. See also: Weak form of the EMT, Semi-strong form of the EMT.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Fama (1970, 1976) defined market efficiency in three forms: weak-form, semi-strong-form and strong-form market efficiency. Weak-form efficiency deals with the notion that no investor can earn an above economic return by developing trading rules based on past price or return information.
Second, strictly speaking, our analysis holds only if the SVAR includes a variable that is efficient in the strong form of the EMH, and strong-form market efficiency is a stringent condition that is unlikely to be satisfied in the real world.