Investing - Theory, News & General • Re: Efficient Market Hypothesis clarification

I lean heavily on the EMH in my investing, but I think OP is mystifying it. Of course it is not perfect or all-seeing (not even all-seeing of the present, much less the future). The EMH comes from the practical fact that there are millions of people actively investing, working VERY HARD to find and correct pricing irregularities, because the rewards for doing so are enormous. Think about a park where, if you find and dispose of a fallen leaf, you win a thousand dollars. The EMH does not say "the park is always perfect", it merely says it will be reliably be very, very clean - clean enough that YOU are unlikely to accumulate riches by hunting for leaves.

The efficient market does not have to be perfect at pricing securities. It just has to be better at it than I am for me to rationally act AS THOUGH it were perfect.

Statistics: Posted by Tamalak — Tue Sep 01, 2026 8:42 am