Does this market agree to the Efficient Market Hypothesis clearly ending market attempts according to the weak, the semi-strong, and the strong forms of efficiency.
This study endeavors to examine the efficiency of Chinese stock market and how the global financial crisis influences the efficiency of Chinese stock market. In order to determine the efficiency of Chinese stock market we apply efficient market hypothesis of random walk and divide our data sample into two periods: one is before global financial crisis and other one is during crisis. Here we apply ADF, DFGLS, PP and KPSS tests on stock market returns in order to check the unit root in data series for both Shenzhen and Shanghai stock exchanges separately. The results of the study shows that Chinese stock market is weak form efficient and past data of stock market movements may not be very useable in order to make excess returns and the global financial crisis has no significant impact on the efficiency of Chinese stock market. 1.
According to efficient market hypothesis stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices....
The efficient market hypothesis suggests that there is no trading system based on currently available information that could be expected to generate excess risk-adjusted returns consistently as this information is already reflected in current prices.
In this paper, I will briefly discuss capital market efficiency and then finish with an extensive discussion of the Efficient Market Hypothesis (EMH), which is a leading theory in explaining some of the major reasons for fluctuations in security prices.
Efficient market hypothesis claims it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information .
Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities.
This article discusses Robert Prechter’s view of the Efficient Market Hypothesis. For more from Elliott Wave International, download this free 10-page issue of Robert Prechter’s .
The efficient market hypotheses also know as the joint hypothesis problem, asserts that financial markets lack solid hard information in making decisions.
On one side of the ring is Fama, a University of Chicago academic who won the prize for his so-called efficient market hypothesis. His stance: Capital markets are efficient pricing machines — reflecting all available information about securities accurately so that investors cannot expect to get superior results to that of the overall market.
On the other side of the ring is Shiller, a Yale University academic who shared the 2013 Nobel Prize in economics for his take on asset prices. He believes that markets are efficient and that human behavior, which is not always rational, tends to influence markets, leading to mispricing. His hypothesis: “Irrational exuberance” can lead to inflated market values for assets.
A "good story" of this sort has surfaced during the current financial crisis. A chapter of the story appeared in a recent New York Times article, "Poking Holes in a Theory on Markets." The theory in question is the efficient market hypothesis (EMH), which the article suggested is so hazardous that it "is more or less responsible for the financial crisis." This quote tells you most of what you need to know:
The concept of market efficiency is a major and broadly accepted hypothesis that mainly developed since the formulation of the market efficiency hypothesis by Eugene Fama, in 1970.