Title: Efficient Market Hypothesis: Is the Stock Market Efficient?
Headings: Efficient Market Hypothesis: Is the Stock Market Efficient?
Efficient Market Hypothesis: Is the Stock Market Efficient?
Key Takeaways
Efficient Market Hypothesis (EMH) Tenets and Variations
The EMH was developed from economist Eugene Fama's Ph.D. dissertation in the 1960s.
Problems of EMH
Qualifying the EMH
Increasing Market Efficiency?
The Bottom Line

Content: This would naturally imply, as many market experts often maintain, the absolute best investment strategy is simply to place all of one's investment funds into an index fund. This would increase or decrease according to the overall level of corporate profitability or losses. But there are many investors who have consistently beaten the market. Warren Buffett is one of those who's managed to outpace the averages year after year. Qualifying the EMH
Eugene Fama never imagined that his efficient market would be 100% efficient all the time. That would be impossible, as it takes time for stock prices to respond to new information. The efficient hypothesis, however, doesn't give a strict definition of how much time prices need to revert to fair value. Moreover, under an efficient market, random events are entirely acceptable, but will always be ironed out as prices revert to the norm. But it's important to ask whether EMH undermines itself by allowing random occurrences or environmental eventualities. There is no doubt that such eventualities must be considered under market efficiency but, by definition, true efficiency accounts for those factors immediately.