CFA Level 1 - Securities Markets
- Semi-strong Form EMH
- Strong Form EMH
It has been shown that an investor can profit from investing immediately when a company reports because it takes time for the market to absorb the new information. This goes against the EMH.
The January effect goes against the EMH. Essentially the January effect indicates that as a result of tax-related moves, investors have been shown to profit by buying stocks in December as they are being sold for losses and then selling them again in January.
Investing using the P/E ratio valuation metric has been an anomaly against the EMH. It has been shown that investors can profit by investing in companies with a low P/E ratio.
4.Price-Earnings/Growth (PEG) Ratio
Investing using the PEG valuation metric has been anomaly against the EMH. It has been shown similar to the P/E ratio that investors profit by investing in companies with low PEG ratios.
Going against EMH, it has been shown that smaller companies, on a risk-adjusted basis, have greater returns their larger peers.
Neglected firms are firms that Wall Street analysts deem too small to cover. As a result, these firms tend to generate larger levels of return, negating the EMH.