In finace, i think theory efficiency market hypothesis is absolutely wrong,, people are rational and emotional
Answer:
Do you mean "People are Irrational"?
People might be, but institutional investors are generally rational, and they control most of the market.
The Effecient Market Hypothesis miss various degrees of insider trading, and as you mention, irrationality on individuals part.....but in general it works in our current framework.
Well the research seems to support the efficient market hypothesis in general, so it's hard for me to agree that it is wrong, especially when you provide no evidence.
More importantly though, you seem to say it is wrong because people are "rational and emotional." That makes no sense. Being rational means you act without emotion, and vice versa. Not sure where you were going with that, but might want to think about it some more, unless of course you're saying people are both at different times. I would agree with that of course, but not them being both at the same time.
Well, there is only one person who says that EMH is wrong, it's Warren Buffett.
He's rich by proving that point, are you rich yet?
Go out the into the stock market to prove us your point. Be sure to make consistent profits daily.
The efficient market theory does not say that it is impossible to make an above average return on the stock market. Obviously some have such as Warren Buffet.
The theory just says that it is very difficult because all available information about a company is quickly reflected in the stock price. To make an above average return, you must have information about a company or sector that other investors don't have or have a superior ability to interpret the available information. If other investors already have this information, the price of the company's stock will already reflect it.
When someone tells me that I should invest in Acme Manufacturing because its share price will go up faster than other companies, I have to ask him what does he know about this company that other investors don't already know. Usually he can't give me an answer.
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