Efficient-Market Hypothesis
From Dickinson College Wiki
-Malkiel's efficient market hypothesis has three versoins.
- Weak form- You can not predict future stock prices on the basis of past stock prices, therefor stock prices behave very much like a random walk.
- Semi-strong from- You can not even use published information to predict future prices. No public information will help an analyst select under-valued securities because market prices already include public information such as balance sheets, income statements, and divivends.
- Strong from- Nothing, not even unpublished developments, can be of use in predicting future prices; everything that is known, or knowable, has already been reflected in the present stock price. Information contained in past prices or any publicly available information is assimilated into market prices. These prices adjust so rapidly that is some degree of mispricing exists, it does not persit for long.
Random Walk | Efficient-Market Hypothesis | Fundamental Analysis | Technical Analysis | Non-Random Walk Theory
