Does the value of the company keep varying so quickly?
2006-09-18 02:50:28 · 7 answers · asked by jarynth2 2 in Business & Finance ➔ Investing
All but the most extreme Efficient Market theorists accept that the stock prices can be irrational in the short term.
Prices are efficient in the long term, not in the short term.
2006-09-18 07:45:37 · answer #1 · answered by Yardbird 5 · 1⤊ 0⤋
Market efficiency has nothing to do with how much the market fluctuates. It has to do with being able to predict the direction of changes based on previous prices or on public information. If it is constantly changing -- but in a random manner, then that does not mean it is inefficient.
The reason that there is so much fluctuation is because information arrives to the market randomly, people need liquidity at random times and people arrive at the maret in a random order.
2006-09-18 02:59:34 · answer #2 · answered by Ranto 7 · 1⤊ 0⤋
The efficient markets theory is just that--a theory. Generally speaking over a long enough period of time prices do tend to normalize, but I for one do not believe that markets are all that efficient. They are too subject to greed and fear for one thing. They are also subject speculation for another both on the buy side and the sell side.
2006-09-18 04:40:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Many market factors influence the price of a stock. There are "market makers" who must try to influence markets to their benefit while staying within the law. There are institutions that must answer monthly to their customers. And there are short and long options players as well as long holders. Also there is public opinion, the number of shares outstanding,etc.
2006-09-19 03:39:41 · answer #4 · answered by Anonymous · 0⤊ 0⤋
What you are asking about is volatility, which has nothing to do with an "efficient" market.
The theory you reference, was originally put forth to suggest how to build an efficient "portfolio." Then some bozo Phd theorist, without any market experience, turned it into a complete sham. There is a little truth in a lie, or the lie wouldn't be believable. Define your terms and truth and reality will become apparent.
2006-09-18 06:19:52 · answer #5 · answered by dredude52 6 · 0⤊ 2⤋
Supply and Demand.
If Bill Gates wants to buy another Russian Nuclear Submarine for $100,000,000.00 USD and he sells some Microsoft shares to buy it obviously the price will go down.
This has nothing to do with the number of Xboxes 360 Microsoft sold that day.
2006-09-18 09:18:36 · answer #6 · answered by Anonymous · 0⤊ 1⤋
Value of companies don`t vary every second. Big investers manipulate stocks to their advantages.
2006-09-18 02:59:45 · answer #7 · answered by J.SWAMY I ఇ జ స్వామి 7 · 0⤊ 0⤋