Efficient Market Hypothesis

Fallacies

The Efficient Market Hypothesis does not state that "markets are efficient" but that markets efficiently find a price for commodities fitting all publicly known information.

Multiple Forms

There are several forms of the Efficient Market Hypothesis so it is important to lock down which one is being referenced.

The weak form states that a commodities future price cannot be predicted from it's past because all public knowledge has been taken into account. It is important to note that the argument does not even state that the price is "efficient", only that a gain cannot be made from trend prediction.

The strong form states that all goods are priced taking into account all knowledge - because private knowledge will still effect the price.

Tautologies

• Since only a market values a price the Efficient Market Hypothesis makes little sense in a different context
• In cases where the hypothesis has broken down (dogs of the dow) it has been modified to state that the returns are equal in value to the skill to execute the trade