This paper was presented to the 2004 Meetings of the Eastern Finance Association in Mystic, Connecticut.
Reflections on the Efficient Market Hypothesis: 30 Years Later
Article first published online: 10 JAN 2005
Volume 40, Issue 1, pages 1–9, February 2005
How to Cite
Malkiel, B. G. (2005), Reflections on the Efficient Market Hypothesis: 30 Years Later. Financial Review, 40: 1–9. doi: 10.1111/j.0732-8516.2005.00090.x
- Issue published online: 10 JAN 2005
- Article first published online: 10 JAN 2005
- efficient markets;
- stock market predictability
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.