Question

Please see the Do you think the “Efficient Market Hypothesis (EMH)” holds in the stock market? What kind of aspects of EMH does apply to the current market or not?

Answer 1

Efficient market hypothesis advocates that all the publicly available informations and the private informations have been discounted into the stock price and there is no scope for making any additional rate of return in the market but it can be seen that there are many investors who was beating the market rate of return quite handsomely for a longer period of time so Efficient market hypothesis does not completely stand in the current scenario of the market as there are also insider as they are making a lot of money in the market and there are also business frauds and Instances of insider trading.

I will think that the semi efficient form of market is currently prevalent as Privately available information have not been discounted into stock price and only publicly available information is discounted into the stock price so insiders are quite often making a higher rate of return and publicly available information are generally not a basis for making additional rate of return in current market so according to me this is a SEMI EFFICIENT form of stock market.