[ExI] Psychology of markets explanations

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Sat Jun 20 14:46:44 UTC 2009


On Sat, Jun 20, 2009 at 7:05 AM, Stathis Papaioannou<stathisp at gmail.com> wrote:
> 2009/6/20 Rafal Smigrodzki <rafal.smigrodzki at gmail.com>
>
>> ### Does it? I thought that this is so only the the strong- or to a
>> lesser extent semi-strong form of the hypothesis. The weak form only
>> says that prices follow a random walk and analysis of past prices
>> cannot be used to reliably achieve above-market returns. I tend to
>> believe EMH in its weak form, aside from minor inconsistencies ( such
>> as high performance of low P/E stocks).
>
> I don't know about the validity of the parenthetical comment. If you
> look at historical financial data you will always find patterns; the
> problem is, the patterns may not repeat in future, especially if
> people think they can use them to make money.
>
### The pattern of high performance of low P/E stocks has apparently
persisted for decades. It is puzzling.

Rafal



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