Author Topic: Market Efficiency  (Read 3523 times)

Daunting

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Market Efficiency
« on: September 29, 2014, 02:51:18 AM »
Hello, I've been struggling with this question for a while, and its resulted me coming to this website for some help. As the majority of you know a lot about finance I was wondering if you could help me with the following question please? Or if you feel like I'm asking too much, a point in the right direction would be really really appreciated.

What do you think are the factors influencing the stock market efficiency/market inefficiency through an study of the debate between advocates of traditional finance and those who support behavioural finance?

Thank you for your time.


PloddingInsight

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Re: Market Efficiency
« Reply #1 on: September 29, 2014, 05:27:05 AM »
Good luck with your school assignment.

Daunting

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Re: Market Efficiency
« Reply #2 on: September 29, 2014, 06:27:58 AM »
Thank you reply, even if it was quite snobbish.

Besides, I wasn't asking actually asking for help, just a direction or an approach in where to take it. Heck, id be all for starting a debate on the topic with myself getting involved too, just to see other peoples opinions on the matter.

PloddingInsight

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Re: Market Efficiency
« Reply #3 on: September 29, 2014, 07:00:26 AM »
I'll be honest, my reaction was based on the combination of your poor sentence structure / word choice -- combined with the advanced nature of the topic you are inquiring about.  It makes you sound like a kid looking for someone to do their research for them.  Maybe English is just not your first language?  If so I apologize.

matchewed

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Re: Market Efficiency
« Reply #4 on: September 29, 2014, 07:23:44 AM »
Eh, I could give less than a shit for the sentence structure. Repeat threads are annoying though.

There is a search function on this site if you want to use it. Try there first. :)

Daunting

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Re: Market Efficiency
« Reply #5 on: September 29, 2014, 07:30:26 AM »
Yeah, english isn't my first language.

@Matchewed I did do a search before hand, but didn't find much...

P.S I'm really sorry for the repeated thread, i actually thought i deleted the other one.


matchewed

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Re: Market Efficiency
« Reply #6 on: September 29, 2014, 12:39:58 PM »
Didn't find much or just didn't look? Sorry for the seeming rudeness but when I search efficient market, inefficient market, market efficient, market efficiency I get all sorts of posts.
http://forum.mrmoneymustache.com/investor-alley/if-you-really-believe-in-passive-investing/
http://forum.mrmoneymustache.com/investor-alley/why-i-think-the-efficient-market-hypothesis-is-wrong/
http://forum.mrmoneymustache.com/investor-alley/if-a-super-investor-offered-to-manage-your-money-would-you-do-it/
http://forum.mrmoneymustache.com/investor-alley/efficient-market-hypothesis-index-investing-and-value-investing/
http://forum.mrmoneymustache.com/investor-alley/anyone-else-only-buying-dividend-stocks/
http://forum.mrmoneymustache.com/mustachian-book-club/david-swensen-investing-and-inefficient-markets/
http://forum.mrmoneymustache.com/investor-alley/efficient-markets-rip/
http://forum.mrmoneymustache.com/investor-alley/individual-stocks-vs-stock-indexing/

The legwork is yours to do. If you truly are interested in hearing people's opinion maybe post something beyond a broadly generic and mostly academic question that people outside of the academic field may have little but a passing thought about. Try making a statement and backing it up to see what sort of discussion falls around that context. GL w/ whatever it is you're trying to do.

Daunting

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Re: Market Efficiency
« Reply #7 on: September 29, 2014, 01:59:48 PM »
Like i said, id of happily joined in on a debate on the question i proposed. Fair enough, I should have made a statement and then backed it up with a discussion, ill keep that in mind for next time.

I did actually look, and all those that you posted are irrelevant apart from:
http://forum.mrmoneymustache.com/investor-alley/why-i-think-the-efficient-market-hypothesis-is-wrong/
which i looked at before i made the post, hence why i said 'didn't find much'.
 

matchewed

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Re: Market Efficiency
« Reply #8 on: September 29, 2014, 02:07:32 PM »
Like i said, id of happily joined in on a debate on the question i proposed. Fair enough, I should have made a statement and then backed it up with a discussion, ill keep that in mind for next time.

I did actually look, and all those that you posted are irrelevant apart from:
http://forum.mrmoneymustache.com/investor-alley/why-i-think-the-efficient-market-hypothesis-is-wrong/
which i looked at before i made the post, hence why i said 'didn't find much'.

I'm guessing you didn't read them since you've just written all those topics about market efficiency, actual people and their behaviors towards the market, their discussions about behavioral aspects of investing, and the thought process behind all those things off as irrelevant. So what would be relevant?

Leisured

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Re: Market Efficiency
« Reply #9 on: October 02, 2014, 01:59:52 AM »

Do stock markets price assets efficiently?  The answer is that markets do price assets efficiently – most of the time. During these times most of the traders are professional investors, often fund managers.

At other times, the market is boiling, and in the news, and a different population of stock buyers move in. These amateurs buy stocks which are rising, sell when they are falling, and end up buying high and selling low. Then the market goes off the boil, drops out of the news, the amateurs leave the market and the professional investors return to the market.

The great J P Morgan, a century ago, said that if even the elevator boy is talking about the stock market, that is the time to sell.

I began buying shares in earnest in 1982, and kept buying during the great eighties bull market. I stopped buying about  985, when dividend yields were low, and price to earning ratios were high. Then I noticed the phenomenon of the amateurs moving into the market. I took Morgan’s advice, except for actually selling stock, rode out the great crash of October 1987, and even after that many of my shares were a little above what I had bought them for. Then the stock market boomed again.

An Australian business man, Alan Bond, rode the stock market up during the early eighties, and set his heart on buying a media company. He bought a television station from another rich business man, the late Kerry Packer, for a high price. Kerry Packer famously said at the time, that ‘at the right price, everything is for sale.’ Two years later, after the 1987 crash, Kerry Packer bought his television station back again from Alan Bond for about half the price he had sold. Alan Bond had borrowed too much. Kerry Packer famously said at the time, ‘you only get one Alan Bond in your life, and I have had mine.’ Kerry Packer, old Australian money, was a professional investor.

Mighty-Dollar

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Re: Market Efficiency
« Reply #10 on: October 13, 2014, 03:58:45 AM »
My answer: Yes the markets are efficient. They always accurately reflect all news and therefore securities are always fairly priced.
Don't pay anyone to attempt to "beat the market". Nobody can. The only thing you can do with take on more risk, which anyone can do, so don't pay any "adviser" to hold your hand.