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/biz/ - Business & Finance

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24781358 No.24781358 [Reply] [Original]

the efficient market hypothesis is the dumbest economic principle i have ever heard

>> No.24781402

said The Motley Fool??

>> No.24781413

It's true to an extent

>> No.24781464

>>24781413
EMH basically delegitamizes the entire nature of value investing

>> No.24781492

>>24781413
Yeah agree. Maybe not fully true, but it's definitely more true for people on /biz/ than for a Wall Street insider.

I generally behave as though 90% of a stock's value is already priced in. More or less depending on how familiar I am with the sector.

>> No.24781543

>>24781492
yeah but you also have to consider that normal traders don't spend a fraction of the time people on wall street do researching and using concrete principles to value a company. if the strong majority of market players don't research anything, that doesn't mean EMH is true, it just means people are lazy and don't want to dig for information, or do so in the right way.

>> No.24781603

>>24781413
>>24781492
in other words, if EMH said "popularized information" instead of "all available information", then it would be relatively accurate.

>> No.24781616

>>24781358
aLl iNvEdToRs R rAtIoNaL

I know the assumptions r just terrible.

behavioural finance theory or nuffin

>> No.24781673
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24781673

>>24781603
>>24781543

Yeah I agree. "All models are wrong, some models are useful" etc.

It's probably more or less wrong depending on where we are in the boom-bust cycle. I'd imagine EMH is most wrong at the steepest part of the upswing when people are FOMO'ing too hard to do their research.

>> No.24782794

>>24781464
>EMH basically delegitamizes the entire nature of value investing
This tells me you have no clue what you are talking about anon. It's okay, I'll teach u
EMH actually supports value investing fren. When you buy something because you believe it to be undervalued, you are conting on the fact that the market is EFFICIENT and someone in the future will fill this gap to the 'real' value of your investment. Everyone has an incentive to profit off arbitrage if mkts are efficient. Now if you were to say the market is 'perfectly' efficient, then you would be correct

>> No.24782892

>>24781616
stuff like that is why haircomb should be taken seriously