Does the Efficient Markets Hypothesis Work?

Most business-school investment classes throughout the world teach the efficient market hypothesis. Many academics espouse EMH as a dominant and overarching theory governing investments. I thought that I would share this theory with TheStreet.com University readers and provide my own opinions as to its veracity.

The EMH was proposed in the doctoral thesis of famed academic Eugene Fama at the University of Chicago. His thesis was an early attempt at integrating behavioral economics into the field of finance.

The EMH is dividend into three sub-hypotheses or forms:

Weak Form: Security prices reflect all security market information from the past. Furthermore, all past rates of return and historical market data cannot predict future prices. Hence trading patterns or rules cannot be gleaned from historical data.

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