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Earlier Views of Market Efficiency

In: A Random Walk to Nowhere How the Professors Caused a Real “Fraud-on-the-Market”

Author

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  • Edward E. Williams
  • John A. Dobelman

Abstract

As we observed in Chapter 3, under semi-strong efficiency all publicly available information is supposed to be impounded in stock prices. As a consequence, the economic and financial analysis of securities is useless. A stock (bond, etc.) is “worth” what its present market price is. This always seemed an odd notion to the many people who earn a living examining corporate financial statements, talking to management, and generally trying to understand and determine the fundamental value of securities. The essence of the securities analyst was (and is) to look at present market prices in order to determine whether a security is correctly valued, undervalued, or overvalued…

Suggested Citation

  • Edward E. Williams & John A. Dobelman, 2020. "Earlier Views of Market Efficiency," World Scientific Book Chapters, in: A Random Walk to Nowhere How the Professors Caused a Real “Fraud-on-the-Market”, chapter 4, pages 53-72, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811207792_0004
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    More about this item

    Keywords

    Efficient Market Hypothesis; Market Inefficiency; Mathematical Economics; Academic Finance; Real-World Markets; Fraud; Random Walk;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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