Senin, 05 Oktober 2009

Definition of Market Efficiency

When we enter into the money markets so the money can grow by itself, it is because we have invested money with the stock sheet.

Many investors are trying to make the money back with profits. However, market efficiency has a policy that was fought in the efficient market hypothesis (EMH) proposed by Eugene Fama in 1970, the policy states that prices fully reflect available information about a particular stock and / or markets. From these statements, we can draw a conclusion. Conclusion is that no investor has the right to have an advantage in predicting the return on stock prices because no one has access to information that is not available to others.

Three ways to identify the classification of the EMH, which is intended to reflect the level that can be applied to a market.

1. Strong efficiency - This is a strong version, which states that all information in the market, whether public or private, are taken into account in stock prices. Information from within can not even give an investor a profit.

2. Semi-strong efficiency - form EMH implies that all public information is calculated into the stock price of shares today. Both technical and fundamental analysis can be used to achieve superior profits.

3. Weak efficiency - Type EMH past claimed that all stock prices are reflected in stock prices today. Therefore, technical analysis can not be used to predict and beat the market.

Similarly, the information that I can tell, this information may be useful.

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