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This post addresses the efficienct market hypothesis.

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Please help with the following problem.

The Efficient Markets Hypothesis holds that markets do not react to news or announcements because by the time the information is disseminated, it has already been anticipated. Accordingly, earnings announcements should not move stock prices because the company's performance has already been anticipated and reflected in the current market price. Do you think that the US markets are efficient?

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Solution Summary

The solution provides a detailed discussion examining the efficient market hypothesis, and determining if the U.S. markets are efficient.

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I definitely think that the U.S. markets are efficient. We do have fluctuations in stock price based on investor calls, which is where the anticipated information comes from, in the majority of cases. However, we see very strong indicators of an efficient market in the U.S. markets. One of the main signs is that even if a company's stock price were predictable or otherwise determinable based on anticipated information, if ...

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