Financial Education

The semistrong form of the efficient market hypothesis assumes that security prices adjust rapidly to all publicly available information. Such information includes market based information and thus the semistrong EMH encompasses the weak form EMH (if markets are semistrong efficient, they are also weak form efficient.)

In addition to market information, other public information includes earnings and dividend announcements, financial ratios, accounting practices, stock splits, and economic and political news. If markets are semistrong efficient, investors should not be able to earn excess risk-adjusted returns if their decisions are based on information that has already been made public. Neither technical analysis nor fundamental analysis would provide a predictable edge.

For more information, see all articles on: Active Management, Fundamental Analysis, Investing in Stocks, Investment Returns, Passive Management, Portfolio Management, Technical Analysis

See also:

Efficient Market Hypothesis: Strong Form

Efficient Market Hypothesis: Weak Form

Are Markets Semistrong Form Efficient?

Are Markets Strong Form Efficient?

Are Markets Weak-Form Efficient?