Market Efficiency

hello everyone

ok nowadays Mr Lobo seldom talk cock already. makes my blog so boring. i always talk like that i am like a ah beng economist. economics is so boring, i also hate to read those economic text books. i only flip thru them very fast, or i just read certain chapters that interest me only. i only read at night, great for bedtime stories.
today i am not going to talk cock again but also something not so boring la. today mr lobo is going to talk about market efficiency.
does anyone knows what is market efficiency? i always though that market efficiency has only one defination

1st defination
http://www.businessdictionary.com/definition/market-efficiency.html
Measure of the availability (to all participants in a market) of the information that provides maximum opportunities to buyers and sellers to effect transactions with minimum transaction costs.

in layman terms, what this means is that for any buyer, there is a seller. buyers and sellers are easily match and transactions can take place easily without any problems or delay.


but as i read more economics bullshit, i realised that market efficiency seems to have another defination. although the words used are the same, but now the meaning is different.

2nd defination
http://www.investopedia.com/articles/02/101502.asp

market efficiency - formulated by Eugene Fama in 1970, suggests that at any given time, prices fully reflect all available information on a particular stock and/or market. Thus, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else
as prices respond only to information available in the market, and, because all market participants are able to access to the same information, no one will have the ability to out-profit anyone else.

In efficient markets, prices become not predictable but random, so no investment pattern can be discerned. A planned approach to investment, therefore, cannot be successful.

Furthermore, the hypothesis argues that an investor who outperforms the market does so not out of skill but out of luck. EMH followers say this is due to the laws of probability: at any given time in a market with a large number of investors, some will outperform while other will remain average

ok again in layman terms, what this means is that the market is unpreditable and random and nobody can have an advantage in beating the market. and nobody can win the market consistently and if someone can do that, it is not becoz of skill but pure luck. sometimes you read good news on the internet or papers, but you cant take advantage of it. you go check the prices and the STI had already moved up. this is why sometimes you hear ppl say "the market had already priced in the news" in my view, this sentence is bullshit.



mmmmmmm... if nobody can beat the market consistently, then how does unti trusts funds manager and trading guru and trading trainers making a living?? strange ...... think about it. its not though trading the market then.

ok lo like this, then no need to go learn technical or fundemantal analysis or any bullshit. no need to go read any fincianl report or biz times or news or prepare for upcoming events. YEAH so shiok!