| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) The inefficient market By John Schroy, on April 21st, 2009 |  One comment  The Crash of 2008 showed that the Efficient Market Hypothesis was fantasy. Although there is a huge amount of free information about investments available on the Internet, this takes time to extract and understand and time has a cost. With too much free information, the law of diminishing returns kicks in. Critical information passes unnoticed. Technologies are now available that allow us to take advantage of free information more effectively. April 21st, 2009 | Print Article |  Email Article |  Topics: American Stock Exchange, Bloomberg, Capital Market Taxonomy, Capital Market Wiki, closed end funds, collaborative research, crowdsourcing, efficient market hypothesis, ETF Connect, Neuberger Berman, REITs, semantic wiki, Yahoo Finance | Category: New Economic Theory | One comment |  Short urlThe Post Stock Buyback Era By John Schroy, on April 19th, 2009 | Leave a comment  The Crash of 2008 signaled a turning point in capital markets. The stock buyback era seemed to have ended. The Efficient Market Hypothesis was discredited. The inability of market experts and major institutions to place a fair value on thousands of securities indicated basic problems in security analysis and the handling of freely available information. This article describes new challenges facing fundamental security analysts in the early 21st century, and the consequent opportunities. April 19th, 2009 | Print Article | Email Article | Topics: Auction Market Preferred Shares, Barack Obama, Barings Bank, beta, Bloomberg, Citicorp, common stock legend, complexity, covariance, efficient market hypothesis, Federal Reserve Bank, Fitch, Graham & Dodd, Inflation, Lehman Brothers, Moody's, Morningstar, Nick Leeson, SEC Rule 10b-18, Standard & Poor's, Stock Buybacks, Technical Analysis, Thomson's, US SEC | Category: New Economic Theory | Leave a comment | Short urlThe 'insolvent bank' oxymoron By John Schroy, on April 1st, 2009 | Leave a comment  Banks, by their nature, are insolvent, requiring government guarantees of their liabilities to protect against bank runs. Over the last fifty years, the percentage of bank liabilities guaranteed by the government has fallen considerably, while banks, free from the shackles of the Glass-Steagall Act, have become increasingly complex. Mark-to-market rules do not provide useful information to either bank depositors or investors, but may increase bank capital requirements, reducing the capacity to lend in the midst of a recession. April 1st, 2009 | Print Article | Email Article | Topics: complexity, efficient market hypothesis, FDIC, Glass-Steagall Act, insolvency, liquidity, mark-to-market, New Deal, stress tests, Timothy Geithner, Walter Wriston | Category: Financial Market Regulator, featured | Leave a comment | Short urlFeatured articles on inside pages
|    Capital Flow Watch has hundreds of articles on economics and investments. Articles have excerpts on the front pages, and on tag, category, search and archive pages. 
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Copyright © 2010 Capital Flow Watch - All Rights Reserved | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Popular Articles