Essay Examples on ACT College

The Efficient Market Hypothesis

The Efficient Market Hypothesis is one of the most well known and influential theories in financial economics Extensive literature exists on the topic as many economists have written about the concept as well as trying to extend upon its framework The origins of the theory date back to the 1960 s nevertheless half a century later the concept is still discussed and very highly regarded which provides motivation for this essay In contrast to this theory is the Adaptive Market Hypothesis This idea provides a more extensive modern look at the EMH theory Proposed decades later the AMH aims to emerge the EMH concept with behavioural finance ideas to reform the idea that many individuals have on EMH trading strategy In this paper I will start by presenting both the EMH and AMH concepts in full Outlining the strengths and weaknesses of both I will then conduct a comparison of the two concepts to form a decision on which idea seems to be superior if any Efficient Markets Hypothesis EMH As with many economic theories and ideas of the modern day the origins of the EMH can be traced far back This theory was initially illustrated by Paul Samuelson 1965 In Samuelson s paper Proof that Properly Anticipated Prices Fluctuate Randomly he adds that in an informationally efficient market price fluctuations cannot be foreseen 

2 pages | 444 words