Do you believe in Efficient Market Hypothesis?

Do you believe in Efficient Market Hypothesis?

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not exactly

i believe that it's best to act as if it is true, however

...what exactly do you mean?

Efficient Market Hypothesis arguments are irrelevant, because the hypothesis hinges on information being perfectly available, which it isn't. Even in the most optimistic of scenarios, information sharing is far from perfect or instant, and as a result markets have friction and inefficiencies.

Until humans develop the ability to mind-meld, there will be no such thing as efficient markets.

>trying to reduce human fear, anxiety, and insecurity into a formula

nope

>Even in the most optimistic of scenarios, information sharing is far from perfect or instant, and as a result markets have friction and inefficiencies.
Unless you have the ability to reliably and consistently capitalize on those "frictions and inefficiencies" -- and do so quickly enough and at low enough transactional costs -- then the hypothesis is still true. EMH doesn't say that markets are perfectly smooth or that information is perfectly shared; it says that the markets are mostly efficient AND that you, the trader, cannot profitably capitalize on the inefficiencies that remain.

Important difference.

>trying to reduce human fear, anxiety, and insecurity into a formula
The entire field of actuarial science is dedicated to this very task, and the insurance and underwriting industries have been successfully doing exactly this for decades.

It may seem daunting to you, but it's not really that difficult for smart people.

This is the only real answer anything else is trolling and/or ignorance.

Not only not all information is available to everyone, different people/groups will react to what's available to them differently, and often irrationally.

If people are irrational most of the time (inb4 some memes about "free will" and what not), how can you expect the market to be rational and efficient all the time?

>different people/groups will react to what's available to them differently, and often irrationally
If half the irrational people scream "SELL" and the other half of the irrational people scream "BUY" then they cancel each other out.

And if the majority screams the same direction, then it's not irrational. It's predictable and priced in.

>how can you expect the market to be rational
EMH doesn't say the markets are rational. It says that inefficiencies are too small and too fleeting to be exploited on a reliable and profitable basis.

Important difference.

>It's interesting how everyone who "disbelieves" EMH doesn't even know the actual EMH.

>it says that the markets are mostly efficient AND that you, the trader, cannot profitably capitalize on the inefficiencies that remain.

Retarded. Even if the markets were "mostly efficient" it'd mean that SOMEONE is capitalising on it.

>blabla muh actuarial science
>It may seem daunting to you, but it's not really that difficult for smart people.

It's one thing to use statistical models to assess risk in insurance or some shit, nothing extraordinary about it.

It's another thing to model the behaviour of a system whose output depends upon the many cumulative decisions from a very large and diverse pool of players. And it's yet ANOTHER completely different thing to model the behaviour of an intricate web of many such interacting systems, which is what "the markets" as a whole are.

>If half the irrational people scream "SELL" and the other half of the irrational people scream "BUY" then they cancel each other out.

You don't know how many are screaming sell, you don't know how many are screaming buy, and you couldn't possibly ever know the conviction, the motivation, the bankroll, the risk tolerance and many other factors, of each seller and each buyer.

>EMH doesn't say the markets are rational. It says that inefficiencies are too small and too fleeting to be exploited on a reliable and profitable basis.
And it has 0 proof for that claim. In fact there's plenty of evidence otherwise, like the many bubbles throughout financial history, the sudden market movements on outcomes of elections, etc.

EMH is even more wrong considering most markets are regulated and not free, which opens even more possibilities for exploitation.

>Even if the markets were "mostly efficient" it'd mean that SOMEONE is capitalising on it.
Not if the inefficient are too small, too fleeting, and too expensive to discover and profit from. Which is exactly what EMH says.

>It's another thing to model the behaviour of a system whose output depends upon the many cumulative decisions from a very large and diverse pool of players.
Thanks for the definition of actuarial science.

>You don't know how many are screaming
It doesn't matter how many are screaming, what they're screaming, or how loudly they're screaming. What matters is whether I can profit from it.

>And it has 0 proof for that claim.
Retarded. I'm not going to engage in a debate with someone who denies facts and willfully keeps themselves in a bubble of denial.

There's much to debate about EMH, but you're obviously not sufficiently educated or smart enough to participate. Thanks for your post.

No rational person believes in the EMH or equilibrium theory. It's practically self-debunking nonsense through and through.

>No rational person believes in the EMH

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I'm halfway through the "C's" now. Should I keep going?

BUY LTC POORFAGS

What on earth? Did you just spew a bunch of unrelated shit about arbitrage and hedged trading at me?

Nice completely sidestepping the issues and particularly ignoring completely the bubbles thing. 7/10 bait

I understand that reading, critical thinking, and logic are not your strengths, but if you think that empirical market studies are "unrelated" to EMH then I don't what to say. I hate to say "I told you so" but then faggots like this come along....

So let's be perfectly clear here: the only people who don't agree with EMH are those too stupid to even know what EMH says. Sad.

>Nintendo shares had the worst day in 26 years when they announced that they don't, in fact, own Pokemon Go.

Yeah... an asset's prices fully reflect all available information all right.

Mk, I'm going to go ahead and put your bullshit to rest:

Perfect knowledge does not exist. Perfect competition does not exist. Pricing is reflexive. Perception is always a factor between fundamentals and action.

Lol, that was easy to debunk the retardation of EMH and equilibrium theory. The only people who agree with EMH are those too stupid to even know what the EMH is.

>Pricing is reflexive
Listen, actual PROFESSORS in universities know better than some shmuck like George Soros.

I bet you don't believe in Queer theory either. Get educated.

>Perfect knowledge does not exist.
EMH doesn't say it does.
>Perfect competition does not exist.
EMH doesn't say it does.

Stop. being. stupid.

I can't have a debate about EMH with someone so ignorant that they don't even know what EMH is. All I can do is keep mocking you and making you look foolish. Which I'm happy to do (it doesn't take much effort or time) but it's not really constructive or informative. Everyone who's reading this thread already knows you're a retard without my assistance.

So unless you're jus some mascochistic cuck who likes getting abused on the internet, I suggest you crack a book sometime.

It needs extreme tempering and will always produce too many negative externaliies and too few positives.

Yes.

Our financial system (In theory) represents the productivity growth and advancement of humanity. And Rome was not built in a day.

So the market represents slow upward growth. Not overnight success.

>actual PROFESSORS in universities know better than some shmuck like George Soros.
You say, "Professors" like they're something to be revered. I mean, if you want to worship dilettantes who believe in the retardation of equilibrium theory, by all means.

>EMH doesn't say it does.
The EMH is predicated on equilibrium theory and therefore makes every ridiculous assumption that equilibrium theory makes.

Stop. being. stupid.

Please read

en.wikipedia.org/wiki/Efficient-market_hypothesis

and then come back. Ask questions about the stuff you don't understand (which is clearly a lot).

Repeating the same stupid memes over and over just makes you sound like an autist. Get some real education.

lol no

You obviously don't understand -- even vaguely -- what you're shilling. Right off the bat it's relating itself to equilibrium theory:

>The EMH was developed by Professor Eugene Fama who argued that stocks always trade at their fair value [Read: An equilibrium price], making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices

>[Read: An equilibrium price]
Funny, but I don't see these words in the Wikipedia article at all. It's almost as if you decided to be a MASSIVE FAGGOT and inserted your own interpretation into the text and tried to pass it off as a quote. But only a RETARD would think they'd get away with that.

Those of us who actually read, and know things, don't fall for stupid games like this, kid. We're perfectly capable of reading the actual article, and providing accurate quotes like:

>EMH does not require that prices remain at or near equilibrium, but only that market participants not be able to systematically profit from market 'inefficiencies'

(Which, amazingly, is what I've been saying since my first posts in the thread.)

So kindly go back. Go back to the books, or go back to your basement. Or both. But go back.

#btfo

Epic bait friend.

>Funny, but I don't see these words in the Wikipedia article at all
Yeah... That's what brackets indicate you illiterate mongoloid.

>EMH does not require that prices remain at or near equilibrium
>Weak-form efficiency

>This implies that future price movements are determined entirely by information
Literally just equilibrium theory. Also: What is perception

>There is a vast literature in academic finance dealing with the momentum effect identified by Jegadeesh and Titman.[23][24] Stocks that have performed relatively well (poorly) over the past 3 to 12 months continue to do well (poorly) over the next 3 to 12 months. The momentum strategy is long recent winners and shorts recent losers, and produces positive risk-adjusted average returns. Being simply based on past stock returns, the momentum effect produces strong evidence against weak-form market efficiency, and has been observed in the stock returns of most countries, in industry returns, and in national equity market indices. Moreover, Fama has accepted that momentum is the premier anomaly


The EMH always just bends back to equilibrium theory, which is dead wrong.

I see it as :
You have more chances to predict if the price at 24:00 will be higher or lower than at 00:00.

Rather than trying to predict all the intraday swings/etc.

>Not if the inefficient are too small, too fleeting, and too expensive to discover and profit from. Which is exactly what EMH says.
Ok, so where's the proof? You're reorient theory, but the reality does not match your assertions based on emh. I mean, I see the opposite is true when you look at trading algorithms like those utilized at many major brokerages, so what's your counterpoint to this fact, and the fact that finance companies will spend millions on trunk line/data center access to ISPs to cut down on 2-3ms of latency.

>Retarded. I'm not going to engage in a debate with someone who denies facts and willfully keeps themselves in a bubble of denial.
That's rich. "I'm going to do nothing but exhibit an elementary understanding of emh, misinterpret the concept of irrational behavior in markets as 'actuarial science', then go on the offensive whenever someone asks for evidence in the hopes that my laughably shallow understanding of live market operations aren't called out."

>whenever someone asks for evidence
You seem to have overlooked the hundred or so scholarly articles and journals that I posted in this thread. Do I need to post more?

#btfo