The Efficient Market Hypothesis A quick look at the EMH. I thought that this excerpt was interesting. The excerpt discusses that in the relative to company mid-term the EMH is not efficient as the short or long term. If the "relative" mid-term is years then would it not be clear to say that the EMH is not accurate/effective at determining stock values.

Where the market is least efficient is in the medium term. Traders make the short term market efficient because they trade on rumours and news and are very close to the source of this information. They move the market rapidly upward or downward when something is announced. However traders seem to be quite inept at pricing stocks properly. They move stocks up or down, but they don't settle on any correct judgement of intrinsic value. Most traders don't care about intrinsic value anyway, seeing 'truth' in prices. Thus in the medium term, that is with regard to the real economic situation of companies on a time frame of months to several years the market is not efficient. Stock prices are quickly moved by sentiment, but they aren't accurately valued by it.

[published by Benjamin Piening]