Reflections on the Efficient Market Hypothesis: 30 Years Later

In recent years financial economists have increasingly questioned the efficient market hypothesis. But surely if market prices were often irrational and if market returns were as predictable as some critics have claimed, then professionally managed investment funds should easily be able to outdistan...

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Bibliographic Details
Published inThe Financial review (Buffalo, N.Y.) Vol. 40; no. 1; pp. 1 - 9
Main Author Malkiel, Burton G.
Format Journal Article
LanguageEnglish
Published Oxford, UK and Boston, USA Blackwell Publishing, Inc 01.02.2005
Blackwell Publishing Ltd
Subjects
Efficient markets
G12
G14
Hypotheses
Market prices
Rates of return
Securities markets
Statistical analysis
stock market predictability
Stock prices
Studies
Theory
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Summary:In recent years financial economists have increasingly questioned the efficient market hypothesis. But surely if market prices were often irrational and if market returns were as predictable as some critics have claimed, then professionally managed investment funds should easily be able to outdistance a passive index fund. This paper shows that professional investment managers, both in The U.S. and abroad, do not outperform their index benchmarks and provides evidence that by and large market prices do seem to reflect all available information.
Bibliography:ark:/67375/WNG-BGCCK6PF-7
istex:8D0FA0E5EAD9788196E2B3E3D7A4B241751938C0
ArticleID:FIRE090
This paper was presented to the 2004 Meetings of the Eastern Finance Association in Mystic, Connecticut.
ISSN:0732-8516
1540-6288
DOI:10.1111/j.0732-8516.2005.00090.x