More on Efficient Market Theory (EMT)

Hi,

Having studied a little more about EMT, I'm now seeing the relevance of it a little more.

If you are a believer in EMT, then you would only ever need to use Technical analysis to gather your information. If on the other hand you do not subscribe to the views of EMT, then you are likely to be drawn away from the Technical analysis, and more toward Fundamentals, and economic factors.

The point of this comes to the fore if you are looking at trends, which according to EMT would lead to the fact that something is going to happen in the company, rather than the other way about. The market has already factored in the event. On that basis, then, the share price indicates the true value of the company at that point.

One thing that EMT appears to do is simplify the view of analysing the stock. Instead of having to look at the company financial records, and research that side of things, it is only necessary instead to consider the price, and how it moves.

I think that it can be seen how that works from the point of view of the current share price, but as yet, I still find it difficult to believe in a view that can give insight into future stock prices through a process of trends and statistics?