Weak Form Efficiency

AAA

DEFINITION of 'Weak Form Efficiency'

One of the different degrees of efficient market hypothesis (EMH) that claims all past prices of a stock are reflected in today's stock price. Therefore, technical analysis cannot be used to predict and beat a market.

INVESTOPEDIA EXPLAINS 'Weak Form Efficiency'

Theoretical in nature, weak form efficiency advocates assert that fundamental analysis can be used to identify stocks that are undervalued and overvalued. Therefore, keen investors looking for profitable companies can earn profits by researching financial statements.

RELATED TERMS
  1. Efficient Market Hypothesis - EMH

    An investment theory that states it is impossible to "beat the ...
  2. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Random Walk Theory

    The theory that stock price changes have the same distribution ...
  5. Strong Form Efficiency

    The strongest version of market efficiency. It states all information ...
  6. Semi-Strong Form Efficiency

    A class of EMH (Efficient Market Hypothesis) that implies all ...
Related Articles
  1. Is Your Psyche Ready For A Bull Market?
    Active Trading Fundamentals

    Is Your Psyche Ready For A Bull Market?

  2. What Is Market Efficiency?
    Active Trading

    What Is Market Efficiency?

  3. Monte Carlo Simulation With GBM
    Fundamental Analysis

    Monte Carlo Simulation With GBM

  4. (Un)Mapping the Trend
    Charts & Patterns

    (Un)Mapping the Trend

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center