IS THE STOCK MARKET PREDICTABLE? | Efficient Market Hypothesis

Is the stock market predictable? Many would argue YES... But the Efficient Market Hypothesis says that it's impossible to “beat” the market because all current and relevant information is already factored into the stock price.

Most traders defensively argue against this theory because if it were true, then that means they can’t outperform the overall market… So why even try?

It is up to you to decide for yourself...

We, on the other hand, are advocates of this theory that the markets are incredibly efficient. But we see it as a GOOD thing because we know that as long as we are trading liquid assets, the pricing is always very fair.

In this video, we show you a demonstration of Market Efficiency, and we also explain what this means to our trading.

Enjoy the video? Please like, share, comment, and subscribe!

Thank you!
Sky View Trading

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[jacoboribilik]

this is precisley the without-going-into-detail explanation of what the HME is I was looking for, thanks.

[stevepatterson]

You forgot one very important fact. In order for all the information to move price to the "efficient" level someone or group of traders would have to have know the "information" before it gets to that level. Traders simply do not understand the drivers behind a market and that is why traders fail.

[uniqueurl]

Still there are traders (HFT often), who makes money from the difference between underlying and it's derivative. So how could that pricing be efficient ?

[CanadianFinanceSimplified]

This video is awesome! Even if I'm checking this out 5-6 years later!

[manelb]

This video doesn't really justify why options would defeat the Efficient Market Hypothesis, under this hypotheses increasing the probability of success just decreases the potential gains on the same proportion because that's the fair pricing, keeping the expected value at 0 (not counting the fees you'll have to pay) so you are still on the same boat.

[MrHavk]

If it's always efficient though, then why would there even be crashes like the great recession in 2008, or the dotcom bubble? If it's efficient, wouldn't all of that be priced in and the markets never wildly rise or fall at all? How does EMH handle blindside events like that?? Loving the content by the way. I intend to watch every video you've got up on this channel lol.

[MrSupernova]

I have to say, as someone about to graduate with a degree in finance and someone who manages his own portfolio you just about nailed it.

The only thing I would add is that markets are not always efficient. One reason is because there is a herd effect in the market which causes short term misprizing. Another reason has to do with timing although markets are notoriously quick to correct.

I'm looking to learn more about options so I'll check out your other videos.

Again, great job! Thanks!

[TheTaquitoProject]

Well, the people who predicted the '08 crash did so based on the mortgage backed securities that caused it. Not based on the "head and shoulders double black cross of DOOM."

[ajkorras]

No counter-arguments? You make EMH sound like a religion. You forget who is using the market: people, which means that there is plenty of behavioral action going on.

[MarviRafaelMontecillo]

i'm new to trading but this sounds very much like what nassim taleb describes in his book "fooled by randomness"

[toddkobell]

I would disagree, there is the studio of institutions trading with backtested algorithms and others with humans. Guess which institution outperforms the other by 400%? Algorithms

[TheGodParticles]

Though the stock market may be efficient its speed to truth varies. Time gets to the true value eventually 100% of the time. Human events and environmental factors effect price. Being the guy that knows the factors and their effects can have an edge on the other guy that doesnt. THAT IS WHY PROS WANT YOU TO PAY FOR THEIR ADVICE.

[Paint]

You could get a better deal on a stock when you buy it when the stock is oversold due to panic selling.

[charleskkakareka]

I'm in the market for the right course. What information can you provide as to why I should choose this one? I'd like to hear some reviews and successes of your students, plus what you've managed to accomplish.

[buckminsterfullerene]

Do you have anything to say about crypto currencies any insight

[joelow]

The market is predictable but not 100%

But you can research and see what happens

Its not just chance

Like warren buffet always beat market and so did other people did using his strategy


Synthetic stock is short plus long

Nothing is ever mispriced it is only bades on prople emotions take adv. Of this

Options?

[rayraycthree]

The market is often overpriced or under priced due to the greed or fear of mob think! A market that drops suddenly after a traumatic event that doesn't really affect the economy is the easiest to identify as under priced but they don't come all that often and you could lose out on earler gains by staying in cash while you wait.

[cjorg]

Your presentation Ignores a lot of data that goes against the assumptions of the EMH. Even a brief study of the markets and human nature, will lead one to quickly see how people, their reactions and common errors affect how market behave. The field of behavioral finance can explain far better these market behaviors which mostly go against the assumptions of the EMH. If you believe the EMH, that's ok for you and your trading style. One should trade in a style that fits their beliefs. But describing the EMH as if it is a fact, and implying that no other styles of trading will work, nor have an 'edge', is either arrogant or ignorant. There is a very long list of very successful traders with audited results (aka Market Wizards), each using a wide variety of trading styles, that have found how to make their style work very consistently. Its ok if you have found your style based upon your beliefs...but that does not mean that other beliefs or styles are not just as successful, if not much more successful.

[mutombomayele]

Would you like to answer my question? How does information system affect market efficiency? kind regards

[yogeeswarpal]

Yo! your videos are great and very helpful, I remember you mentioning about predicting Volatility, is it Index VIX or individual stock you are talking about? and how to do it, knidly make a video about it if possible