Question

1. What form of market efficiencies is historically and currently supported by evidence? Over time have the markets become more or less efficient and if so how?

2. Of the two approaches, which most closely follows your own personal investing style and why?

Regarding Efficient Market Hypothesis

Answer 1

1) Of the three market efficiencies comprising of weak, semi-strong and strong, the global market has been striving to move towards the "string form efficiency" market where ," all share prices reflect the whole available information, (public and private), meaning no individual can make excess returns, or beat the market, the market has always has been remained in the "Semi-Strong Form Efficiency" phase, where the share prices adjust to publicly available new information quickly, and in an unbiased manner, so that no excess returns can be made trading on that information. An ideal case could be reviewing consistent upward or downward price adjustments after a news hits. Some of the examples could be the techonoly bubble or the recent coronavirus crises.

On the news of the corona crisis, stock markets around the world collapsed rapidly in March 2020 and while the economic recovery after the corona crisis remained difficult to get off the ground, stock markets around the world improved. Many investors saw the massive stock market downturn in March following the global coronavirus outbreak as an ideal entry point. More generally, great monetary and fiscal stimulus supported the economic recovery. Low interest rates, in particular, make equity investments especially attractive. Nevertheless, it would be wrong to ignore the signals from an analysis of market efficiency. After all, they have proven their worth historically. That is why we continue to be cautious in our investment strategy, despite the relatively favourable economic outlook and strong policy incentives.

2) While every investor has his own style of investment, i usally prefer mixing both fundamental (DCF & CAPM) and technical analysis (Candle sticks, patterns) + staying updated on the recent events while investing.

This is based on the assumption that the stock price has priced in every event in the market.