6 Dec 2022
Efficient Market Hypothesis: Risk verses Return
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The Efficient Market Hypothesis (EMH) or Theory states that share prices reflect all information.
Meaning that listed companies are always trading at their fair market value in theory which is why index investing can work.
Using EMH, the attached is forecasting that the efficient market frontier is moving up and to the right in 2023 because of the fall in asset prices during 2022.
If the theory is correct, expect better returns but with more volatility in 2023.
Click for chart.
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