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| Subject: efficient market hypothesis In finance, the efficient-market hypothesis (EMH) asserts that financial markets are “informationally efficient”, or that prices on traded assets (e.g., stocks, bonds, or property) already reflect all known information, and instantly change to reflect new information. Therefore, according to theory, it is impossible to consistently outperform the market by using any information that the market already knows, except through luck. Information or news in the EMH is defined as anything that may affect prices that is unknowable in the present and thus appears randomly in the future. The hypothesis has been attacked lately by critics who blame belief in rational markets for much of the current financial crisis, with noted financial journalist Roger Lowenstein recently declaring “The upside of the current Great Recession is that it could drive a stake through the heart of the academic nostrum known as the efficient-market hypothesis.” (Wikipedia Jan 2010) Post Modern Security Analysis By John Schroy, on August 16th, 2009 |  One comment  Total salaries of securities analysts working for financial institutions in 2006 amounted to only 1/100 of one percent of the value of outstanding corporate equities, domestic and foreign corporate bonds, and municipal bonds in the US market. The exceeding complexity of modern capital markets, combined with too little being spent on investment analysis, has put the savings of millions of Americans at risk. August 16th, 2009 | Print Article |  Email Article |  Topics: Benjamin Graham, Citicorp, complexity, CUSIP, efficient market hypothesis, Fundamental Analysis, Graham & Dodd, index funds, Moody's, Post Modern Security Analysis, Standard & Poor's | Category: New Economic Theory | One comment |  Short urlPost Modern Security Analysis By John Schroy, on August 6th, 2009 | 2 comments  The target of classical security analysis is ‘intrinsic value’, a fuzzy concept defined as the value justified by the facts. Financial markets have become vastly more complex since the days of Graham & Dodd. Since the 1960’s, stock prices have generally exceeded ‘intrinsic value’. New techniques are needed now to handle the flood of free investment information. August 6th, 2009 | Print Article | Email Article | Topics: Benjamin Graham, Berkshire Hathaway, David Dodd, efficient market hypothesis, Eugene Fama, Fundamental Analysis, gold standard, Graham & Dodd, hedge funds, index funds, Indonesia, intrinsic value, Modern Portfolio Theory, OSINT, Post Modern Security Analysis, SEC Rule 10b-18, Standard Statistics, Warren Buffett | Category: New Economic Theory, featured | 2 comments | Short urlPost Modern Security Analysis By John Schroy, on August 1st, 2009 | One comment  Security Analysis is the study of facts about negotiable instruments for the purpose of determining whether a particular instrument is appropriate for a specific investor at a particular time and the intrinsic value of the security compared to its market price, if any. The technique has evolved over time with the changing nature of information. In the 21st century, with a flood of open source information and increasingly complex, global markets, new approaches are necessary. August 1st, 2009 | Print Article | Email Article | Topics: Benjamin Graham, Bernard Madoff, Black and Scholes, common stock legend, David Dodd, efficient market hypothesis, ERISA, Eugene Fama, gold standard, Graham & Dodd, Harry Markowitz, John Burr Williams, Miller and Modigliani, Moody's, Paul Krugman, Post Modern Security Analysis, Richard Nixon, SEC Rule 10b-18, Standard & Poor's, The Economist, US SEC, W.D. Gann, Warren Buffett, William Sharpe | Category: New Economic Theory | One comment | Short urlFeatured articles on inside pages
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