Efficient market hypothesis

The efficient market hypothesis, the stock market is always efficient, and the idea of good material also bad news also all but already factored into stock prices. Since the market is efficient, that is to study the financial aspects of the company (fundamental analysis) also, statistical data approach (technical analysis) also are correlated defined as it both meaningless, it was according to the movement of the entire market "index investment "what I am tied to a theory that is it the best.

Shares in the market there are two contradictory idea that the "fundamentals School" "Technical School" from the old days, each of believers each other and had waged a quarrel barren was also similar to the religious controversy. But efficient market hypothesis is denied both, has brought a third of reasoning that index investment in the world of investment theory.

And as statistics to boost the efficient market hypothesis, active funds should investment professional is operational, statistics that return is less than the index fund if the average has gone out.

Is said also to the Holy Scripture of the efficient market hypothesis and the "Wall Street of random Walker (Burton Malkiel Author)", "Stocks for the Long Run (Japanese title" equity investment that was positioned as is it optimal index investment from the analysis of the data of the past 200 years ", by Jeremy Siegel Author)" is such a hit, index investment in the past 10 years showed me at once spread also among the general investors.

Moreover index investment, may also be used to minimize the investors of effort and cost. Even without studying such as financial and technical indicators of the company, All you need to invest in an index fund, because I yield of the market average is obtained, there is no so effortless story. This recent years, from that, what efficient market hypothesis = index investment, is becoming a theory that's technique that yields the highest stock returns become dogma.

However, index investments that make a profit without any effort, from the financial industry such as an active fund manager has been criticized to be a "free rider (free riding)". First place in principle, it is because many of the active fund to invest with a firm financial analysis, technical analysis, it is why the stock market has become efficient. If accustomed index operation is overwhelming majority if, in order to reverse the market is inefficient, towards the return of the active fund should be the excellence.

However, the proportion of index investment in the stock market of the world is said to be about 10%, we are seen as highly unlikely to be the majority.