Semistrong Form of the Efficient Markets Theory
A controversial model on how markets work. It states that the market efficiently deals with nearly 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 upon them, are useless because any facts that might cause technical or fundamental changes are already reflected in the security price. Investors and academics disagree on how well the model works. See also: Weak form of the EMT, Strong form of the EMT.
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A component of the theory of efficient markets that holds that security prices adjust nearly instantaneously to publicly available information relevant to valuation of securities. If security markets are efficient in the semistrong form, investors cannot earn extraordinary returns by activities such as perusing financial reports, investigating financial ratios, or reading investment newsletters. See also weak form.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.