There’s no other channel out there like this one. Very educational and professional. Unlike all those other youtubers that are recommending stocks to buy every week, every month. Good job Jimmy! Keep it up
My entire investment theory is based on the fact that markets are inefficient and overreact, therefore, I can beat the market by being rational and patient.
Right, but then all the people exactly like you would earn a tremendous amount of money, and use that money to invest in the same strategy, until they make up such a large portion of the investment market that the strategy basically breaks even
Hello Jimmy, Thank you for the background and condensed advices you share like this. Out of all my subscriptions on youtube, the ones I look forward to watching the most is the ones that start with : "Hi, Im Jimmy, and in this video.." I have some points of interest you and suggestions for future material; -Asian market post Covid19. Globalisation, pulp backs from asia aso. -Financial statements 101 readings, are there shortcuts for the stupid investor? -Macroeconomics and oil, gold, silver, currencies, interest rate...how do we read the market and interpret hiw it affects our investments. Thanks, take care
I love the consistent and high quality videos you create. Thank you for another. Congrats on that A! As long as there are inefficiencies in the humans investing, there will be at least temporarily some inefficiency in the markets. There is so much emotion and psychology which impacts stock price.
The best strategy I found so far for people working 50 hours per week and only have a decent low 6 figure savings is to combine index investing and value investing approach. The similarity of the two though is the buy and hold aspect. The diversification aspect is the main difference. Value investing for sectors tou know and index investing for everything else. Most people do not know how particular products/service works let alone the business.
Good stuff, I invest based on fundamentals, but in the days and weeks leading up to any position that I plan to take I use technical analysis like a day trader. I'm going to buy regardless, but I have saved more than a few bucks here and there in that manner.
Thanks for the video. Efficient Market Theory does obviously not work in the real world. It states that all information is priced in. But as soon as the first person comes arround and relies on it and is not doing the proper research on all the information available the price turns inacurate.
6:08 value investing based on p:e (or p:b) is a away of taking on systematic risk that has positive expected returns in a diversified portfolio. 'Value' is one of the risk factors in the EMH - yes, contrary to popular belief, value stocks are more risky.
Been reading "A random walk down wall street" on my own, I would say this is a great concise explanation of of EMH, You pretty much summarised 2 chapter of the book into a 9 minute video 😁
Hi Jimmy. I think we can do the following prediction/bet for the market right now: as of now, we had only inflationary measures provided by the Fed. We have to see some deflationary measures as well, this combination will give the beautiful deleveraging (I use Ray Dalio's phrase on that). So, for now, we can predict/bet that the market will go down short-term. So simply, we can beat the efficient market hypothesis if we hypothesize some elements/data that have not been used yet at the hypothesis.
Can’t believe that any market is efficient that sells off based upon what one guy says at his shareholder meeting. Like you said, I think the market is somewhat efficient imo but not completely.
thank u jimmy u r awesome!!! congrats on the A u deserve it and everyone LIKE the video show thanks to the research it takes many hours!!!! Also interesting info for me to ponder... love it!! As a researcher myself great work and I love it !!! you have always been a go to for insight for me since I found your channel, you have it and hope you prosper from all your hard work!!!!!!!!!!!!!!!!!!!! LIKE IT it's great insight!! I watched 2x to it intake all... deep!!!! I trade options and have long term too, basically short and long term investing together, I find these perspectives true in my trading. I don't believe in hypothesis short and exploit it in options trading but do see it in long term holdings I purchase. LOVED IT!! I didn't know about the Dr. Jimmy in the making I can see it. Thanks for all the great videos that have helped me learn about investing as a whole. Side note I notice no ads which I appreciate since i'm in tune to what you are saying and no interrupts is helpful to get the video. I would totally let an ad run through tho for your benefit!! I have not watched videos due to too many ads, not worth their opinion, I value your insight and true value and integrity to your viewers. I have and will always tell others about your channel.
As long as the market is dominated by traders/hedge funds looking to maximize profits with a one year outlook and investors that are responsive to emotions the theory doesn't hold in my opinion. Honestly just look at Tesla as the extreme example of the influence of emotions on the market price of a stock
Thanks for the Video Jimmy, your straight to the point style saves so much time and provides great info. PS was wondering if you watched Berkshires annual meeting if so a video on Mr Buffets main points would be great
How can someone construct a portfolio to maximize total returns in the strong form of the efficient market? Where can I screen for the riskiest investments possible?
I can easily disprove the EMH. Whenever there's a news event that creates an inefficiency in the markets, it takes time for investors to buy or sell enough stocks to have it reflected in the price. The markets will be inefficient during that time window.
@@yemisadiq8346 During that time window, the market overvalues or undervalues the company, and that's what results in the inefficiency. The real value of the company will have increased or decreased, so investors can buy stocks at a discount or sell them at a premium until the price stabalises. Also, the majority of investors can misinterpret the information, and that results in the market being inefficient until they interpret the information correctly. The Tesla short squeeze is a good example.
That overvaluation or undervaluation stems from behavioural finance, a situation where irrationality of investors makes them take risks because they are confident they can always win or do otherwise because they felt the market must go in line with their belief. For this reason, the efficiency of the market is defeated.
Hi Jimmy, nice video as always! I do have a silly question here, if all investors use very similar valuation methods, DCF for example, then the only thing that really differentiate their success is either insider information, luck, or risk tolerance right? Thanks.
Hey Jimmy, thank you very much for the videos, help me a lot of studies. My question is: if I want to invest in potable water, which ones and where could I look for a good company in the sector? Thanks again
Great video ! Could you at some point make a video on how you put a fair value on sectors or industries ? How to know if which are under and/or over valued. Thanks
Hi Jimmy, could you please look into who Jim Simons is, and the hedge fund Renaissance Technologies that he founded? Perhaps you could make a video about them, in particular how they make money and the types of returns they consistently achieve over the last 38 years of operation. I have the suspicion that after learning how this hedge fund operates, you might end up re-evaluating your view on efficient market hypothesis.
I have a question about this in relation to index options like SPY. People say that options is an efficient market and they are all “priced in” - so does this mean if I buy a SPY call with 30 days until expiration that is 5% ITM, is the expectation that the price will go up slowly over the next 30 days already priced into the premium? And I’ll only make money on that trade if the price goes up more than what the market expects?
What if you invested all your tuition($200000?) into the SPY etf.... Would your total income, with the degree, beat the reinvested average 8% return after 40 years? I get $4,854,677.
Hey there, I'm curious to know about the studies referred about the efficiency of fundamental analysis it would be great if you can share the titles to look them up. I agree that the important thing is that people have the correct ability to pick stocks that will outperform over the long run. However, I am not so sure how "correct ability" would be defined in academic terms, and, if it was defined, then this probably mean the information is publicly available, or at least semi available if you can pay for the paper, which would mean institutional investors would have it easy an would have an advantage there, and would not underperform most of the time. Anyways just thinking out loud, which is why I'm curious to check them out. Thanks!
7:11 not true, an investor can increase their expected returns above the market by increasing their exposure to known systematic risk factors, i.e. companies with low p:b or p:e, small-cap companies, companies with high profitability, and companies that invest their cash flow conservatively. Warren Buffett outperformed the market by gaining exposure to these factors and using leverage (see the paper 'Buffet's alpha'). While back in the day it took the genius of Buffett to do this intuitively (the evidence on factors hadn't been published at the time), this can now be achieved through factor-tilted ETFs.
How does technical analysis not drive price if there are millions of HFT algorithms tracking every single measurement, moving averages, high’s, low’s, volume and price action?
Studies have indicated that a firm’s annual financial statements are an important source of information for making equity investment decisions. Yet, other studies indicate that share prices do not react significantly to the publication of the annual financial statements. How would you reconcile these results with each other and with the Efficient Market Hypothesis? HOW TO ATTEMPT THIS QUESTION
I think you'd have to make a lot of assumptions such as everyone participating in the market gets access to the same news at the same time, that they gain the same investing perspective from that news, have the same level of access to investment capital, hold the position for the same duration, etc 🤷🏿♂️ so many factors determine ones return on an investment
but warren buffet is not even outperforming the market or am I missing something? Furthermore, he is the only investor cited when it comes to truely outperforming the market over a long run so if he even outperforms the market he is still only 0.001% off all investors what would confirm EMH-Thesis?
Why would you say that fundamental analysis has worked in the past? If we just go off of active investing mutual funds, it just isn't true (after fees) that they can consistently beat the market.
That's true, active investing mutual funds charge a big fee and that hurts their performance. But how about someone like Buffett, or many of the largest hedge funds. Those are active managers, and have beaten the long term average, using fundamental analysis. So I agree it's not clear cut, but I could see situations where it works and where it doesn't
@@LearntoInvest so if you aren't buffet or you don't have access to the largest, most exclusive hedge funds, best strategy is to index with low-cost, globally diversified etfs. Also, Buffet made a lot of his money from exposing himself a lot to the value premium, which means he took more risk by buying cheap stocks and was rewarded for that. Anyway, great video either way.
Crashes and bubbles prove that markets are inefficient. In the long run, the markets are efficient since stock usually converges to its fair value, in the short run, momentum rules.
Are you saying markets are inefficient in the short-run? Economic cycles indicate period between end of one investment window and beginning of a new one. The bubble itself represents a culmination of inefficiency, driven by behavioural factors rather than technical analysis (to beat the market in the weak form)/fundamental analysis(to beat the market in the semi-strong form). This tells me the bubbles and crashes were not assumed conditions of the EMH since they are mostly led by emotions.
Yeah but for the market to reflect all information first someone needs to use that information to buy or sell a stock. Because market is blind on itself. That means that at least for a short amount of time between information leaking and investors investing on that information market is Inefficient. Now for public they will never get that information early. So for regular person you can't beat the market.
Once he starts trading he’ll realise that all the “theories” against technical analysis are are to be take with a grain of salt. Plus this theory does non mention the human factor, people are unpredictable.
I have no interest in markets. I find putting in hybrid schemes to be more than satisfactory as I don't want to be taxed more on other incomes on income booms or bear unneccessary losses. I am studying for a financial management exam myself and the books make this seem like a mountain gorilla eating a lion. Thank you for the video.
We all have the same access to Tesla right now but people are demonstrating FOMO and the price is bloating. This video largely went over my head though. I need to watch it one or two more times when I'm not busy.
There’s no other channel out there like this one. Very educational and professional. Unlike all those other youtubers that are recommending stocks to buy every week, every month.
Good job Jimmy! Keep it up
Try Ben Felix and his Common sense investing.
When Jimmy gets his PHD he will be forever known as "Doctor J."
Hi, I'm Dr. Jimmy. Enough said.
The efficient market theory states that as soon as Jimmy releases a new video prices adjust accordingly to reflect the new information.
My entire investment theory is based on the fact that markets are inefficient and overreact, therefore, I can beat the market by being rational and patient.
Right, but then all the people exactly like you would earn a tremendous amount of money, and use that money to invest in the same strategy, until they make up such a large portion of the investment market that the strategy basically breaks even
@@Qwertype315 I guess I'll just have to stay one step ahead of y'all!
Thank you so much ! I have a Corporate Finance exam tomorrow and you really helped me understand this subject !
Hello Jimmy,
Thank you for the background and condensed advices you share like this. Out of all my subscriptions on youtube, the ones I look forward to watching the most is the ones that start with : "Hi, Im Jimmy, and in this video.."
I have some points of interest you and suggestions for future material;
-Asian market post Covid19. Globalisation, pulp backs from asia aso.
-Financial statements 101 readings, are there shortcuts for the stupid investor?
-Macroeconomics and oil, gold, silver, currencies, interest rate...how do we read the market and interpret hiw it affects our investments.
Thanks, take care
I spent way too long trying to understand this for my Series 66 exam and this one video really made it clear for me.
Jimmy, I love the info and way you present it. It's like getting a finance degree faster than going to university. 🙏
I was struggling with EMH, until I landed here. Thanks buddy!
I love the consistent and high quality videos you create. Thank you for another. Congrats on that A! As long as there are inefficiencies in the humans investing, there will be at least temporarily some inefficiency in the markets. There is so much emotion and psychology which impacts stock price.
How do you model humans inefficiencies? That seems to be subjective anecdotal examples.
Goodluck on your doctorat! You deserve it!
The best strategy I found so far for people working 50 hours per week and only have a decent low 6 figure savings is to combine index investing and value investing approach. The similarity of the two though is the buy and hold aspect. The diversification aspect is the main difference. Value investing for sectors tou know and index investing for everything else. Most people do not know how particular products/service works let alone the business.
Jimmy,
Brillant, 9 minutes for any investor to know about EMH...best investment of your time.
Thanks Jimmy! I'm currently studying for my Investments Unit, and you beautifully explained an entire chapter in my textbook! Work smart, not hard ;)
Excellent video as usual, Jimmy. You will do great getting your PhD, you’re very smart. Thanks for sharing your knowledge!
You are the best Jimmy. Stay humble.
Good stuff, I invest based on fundamentals, but in the days and weeks leading up to any position that I plan to take I use technical analysis like a day trader. I'm going to buy regardless, but I have saved more than a few bucks here and there in that manner.
Congratulations, Jimmy!
Nice explanation Jimmy!...we are covering EMH in my investment course for my ChFC certification.
Thanks for the video.
Efficient Market Theory does obviously not work in the real world. It states that all information is priced in. But as soon as the first person comes arround and relies on it and is not doing the proper research on all the information available the price turns inacurate.
Awesome once again Jimmy, thank you for all of your time, these videos are a gift for all of us!!
6:08 value investing based on p:e (or p:b) is a away of taking on systematic risk that has positive expected returns in a diversified portfolio. 'Value' is one of the risk factors in the EMH - yes, contrary to popular belief, value stocks are more risky.
Been reading "A random walk down wall street" on my own, I would say this is a great concise explanation of of EMH, You pretty much summarised 2 chapter of the book into a 9 minute video 😁
Jimmy we need a video of your stock portfolio. 💥
Hi Jimmy. I think we can do the following prediction/bet for the market right now: as of now, we had only inflationary measures provided by the Fed. We have to see some deflationary measures as well, this combination will give the beautiful deleveraging (I use Ray Dalio's phrase on that). So, for now, we can predict/bet that the market will go down short-term. So simply, we can beat the efficient market hypothesis if we hypothesize some elements/data that have not been used yet at the hypothesis.
No dislikes, I like it
Excellent. Many thanks for the clarity of delivery and learning.
Thanks! Watching your video was so much better than reading my textbook! :)
Just the intro of the Video prompted me to give you a thumb up. Great content!
Loving your videos once again jimmy! Though i am new to investing and this may take some time for me to digest .. cant wait for your next video!
Thanks for the support!!
Can’t believe that any market is efficient that sells off based upon what one guy says at his shareholder meeting. Like you said, I think the market is somewhat efficient imo but not completely.
thank u jimmy u r awesome!!! congrats on the A u deserve it and everyone LIKE the video show thanks to the research it takes many hours!!!! Also interesting info for me to ponder... love it!! As a researcher myself great work and I love it !!! you have always been a go to for insight for me since I found your channel, you have it and hope you prosper from all your hard work!!!!!!!!!!!!!!!!!!!! LIKE IT it's great insight!! I watched 2x to it intake all... deep!!!! I trade options and have long term too, basically short and long term investing together, I find these perspectives true in my trading. I don't believe in hypothesis short and exploit it in options trading but do see it in long term holdings I purchase. LOVED IT!! I didn't know about the Dr. Jimmy in the making I can see it. Thanks for all the great videos that have helped me learn about investing as a whole. Side note I notice no ads which I appreciate since i'm in tune to what you are saying and no interrupts is helpful to get the video. I would totally let an ad run through tho for your benefit!! I have not watched videos due to too many ads, not worth their opinion, I value your insight and true value and integrity to your viewers. I have and will always tell others about your channel.
As long as the market is dominated by traders/hedge funds looking to maximize profits with a one year outlook and investors that are responsive to emotions the theory doesn't hold in my opinion. Honestly just look at Tesla as the extreme example of the influence of emotions on the market price of a stock
Good point.
I think ,particularly now in the current market. The EMH is good 4 Bear Market. Ur thoughts? Thanks
Thanks for the Video Jimmy, your straight to the point style saves so much time and provides great info. PS was wondering if you watched Berkshires annual meeting if so a video on Mr Buffets main points would be great
Cool Jimmy! Go get em!
How can someone construct a portfolio to maximize total returns in the strong form of the efficient market? Where can I screen for the riskiest investments possible?
I can easily disprove the EMH. Whenever there's a news event that creates an inefficiency in the markets, it takes time for investors to buy or sell enough stocks to have it reflected in the price. The markets will be inefficient during that time window.
Wow. When do you get your Nobel price?
@@rumpelr Lol
Please can you explain what happens within that window that results in market inefficiency.
@@yemisadiq8346 During that time window, the market overvalues or undervalues the company, and that's what results in the inefficiency. The real value of the company will have increased or decreased, so investors can buy stocks at a discount or sell them at a premium until the price stabalises. Also, the majority of investors can misinterpret the information, and that results in the market being inefficient until they interpret the information correctly. The Tesla short squeeze is a good example.
That overvaluation or undervaluation stems from behavioural finance, a situation where irrationality of investors makes them take risks because they are confident they can always win or do otherwise because they felt the market must go in line with their belief. For this reason, the efficiency of the market is defeated.
A PHD in Investing. Awesome.
Hi Jimmy, nice video as always! I do have a silly question here, if all investors use very similar valuation methods, DCF for example, then the only thing that really differentiate their success is either insider information, luck, or risk tolerance right? Thanks.
Hey Jimmy, thank you very much for the videos, help me a lot of studies. My question is: if I want to invest in potable water, which ones and where could I look for a good company in the sector? Thanks again
Excellent analysis of EMH. Thank you!
Helping very much with my finance class. Thank you !!
Believers of the strong form answer with "priced in" to any doubt you have about current prices.
Great video! This really helped me to understand EMH.
Great video as always Jimmy! Would you be able to take a look at the gold sector at some stage? Keep up the good work mate :)
Great video ! Could you at some point make a video on how you put a fair value on sectors or industries ? How to know if which are under and/or over valued. Thanks
Hi Jimmy, could you please look into who Jim Simons is, and the hedge fund Renaissance Technologies that he founded? Perhaps you could make a video about them, in particular how they make money and the types of returns they consistently achieve over the last 38 years of operation. I have the suspicion that after learning how this hedge fund operates, you might end up re-evaluating your view on efficient market hypothesis.
I have a question about this in relation to index options like SPY. People say that options is an efficient market and they are all “priced in” - so does this mean if I buy a SPY call with 30 days until expiration that is 5% ITM, is the expectation that the price will go up slowly over the next 30 days already priced into the premium? And I’ll only make money on that trade if the price goes up more than what the market expects?
What if you invested all your tuition($200000?) into the SPY etf.... Would your total income, with the degree, beat the reinvested average 8% return after 40 years?
I get $4,854,677.
People who say Technical Analysis doesn't work are using it wrong.
It is not used as a crystal ball. It's used to manage risk when entering positions.
This was one of the most helpful and easy to follow explanations - thank you!!!
Amazing video my brother. Thank you so much!
Hey there, I'm curious to know about the studies referred about the efficiency of fundamental analysis it would be great if you can share the titles to look them up. I agree that the important thing is that people have the correct ability to pick stocks that will outperform over the long run. However, I am not so sure how "correct ability" would be defined in academic terms, and, if it was defined, then this probably mean the information is publicly available, or at least semi available if you can pay for the paper, which would mean institutional investors would have it easy an would have an advantage there, and would not underperform most of the time. Anyways just thinking out loud, which is why I'm curious to check them out. Thanks!
nice content, conrats on the A
Markteffizienzhypothese - such a beautiful German noun. ;)
Great video! Really helping me out with my finance course. :)
7:11 not true, an investor can increase their expected returns above the market by increasing their exposure to known systematic risk factors, i.e. companies with low p:b or p:e, small-cap companies, companies with high profitability, and companies that invest their cash flow conservatively.
Warren Buffett outperformed the market by gaining exposure to these factors and using leverage (see the paper 'Buffet's alpha'). While back in the day it took the genius of Buffett to do this intuitively (the evidence on factors hadn't been published at the time), this can now be achieved through factor-tilted ETFs.
I'd love to hear your take on the gabaix-koijen inelastic market hypothesis
what about Jim Simons renaissance Quant strategy?
Oh that guy uses some crazy math models id like to see a video on him bro
Excellent Video
First like and view...!👌🏽
very nice explanation
How does technical analysis not drive price if there are millions of HFT algorithms tracking every single measurement, moving averages, high’s, low’s, volume and price action?
Thank you very useful
Studies have indicated that a firm’s annual financial statements are an important source of
information for making equity investment decisions. Yet, other studies indicate that share
prices do not react significantly to the publication of the annual financial statements. How
would you reconcile these results with each other and with the Efficient Market Hypothesis?
HOW TO ATTEMPT THIS QUESTION
amazing video!
I think you'd have to make a lot of assumptions such as everyone participating in the market gets access to the same news at the same time, that they gain the same investing perspective from that news, have the same level of access to investment capital, hold the position for the same duration, etc 🤷🏿♂️ so many factors determine ones return on an investment
but warren buffet is not even outperforming the market or am I missing something?
Furthermore, he is the only investor cited when it comes to truely outperforming the market over a long run so if he even outperforms the market he is still only 0.001% off all investors what would confirm EMH-Thesis?
Hi, I’m Victor (hehehe) hey seriously, what about an analysis on BRK.B now that Mr. Buffett is highly in fashion. That would be super interesting 🧐
776 Oberbrunner Ridge
If markets were rational / efficient, a money losing company like Tesla wouldn’t trade at it’s current valuation.
I agree
They’re not losing money though.
This grape is sour!!!!
You go girl!
Casey Burns Investing last time I checked the financial statements it showed that they are not a profitable company.
Why would you say that fundamental analysis has worked in the past? If we just go off of active investing mutual funds, it just isn't true (after fees) that they can consistently beat the market.
That's true, active investing mutual funds charge a big fee and that hurts their performance. But how about someone like Buffett, or many of the largest hedge funds. Those are active managers, and have beaten the long term average, using fundamental analysis. So I agree it's not clear cut, but I could see situations where it works and where it doesn't
@@LearntoInvest so if you aren't buffet or you don't have access to the largest, most exclusive hedge funds, best strategy is to index with low-cost, globally diversified etfs.
Also, Buffet made a lot of his money from exposing himself a lot to the value premium, which means he took more risk by buying cheap stocks and was rewarded for that.
Anyway, great video either way.
So weak form and strong form is same?
Crashes and bubbles prove that markets are inefficient. In the long run, the markets are efficient since stock usually converges to its fair value, in the short run, momentum rules.
Are you saying markets are inefficient in the short-run? Economic cycles indicate period between end of one investment window and beginning of a new one. The bubble itself represents a culmination of inefficiency, driven by behavioural factors rather than technical analysis (to beat the market in the weak form)/fundamental analysis(to beat the market in the semi-strong form). This tells me the bubbles and crashes were not assumed conditions of the EMH since they are mostly led by emotions.
love it thanks
Is technical Analysis
Part of weak EMH
wonderful !!!
How about James Simon?
Good video, usefull
Yeah but for the market to reflect all information first someone needs to use that information to buy or sell a stock. Because market is blind on itself. That means that at least for a short amount of time between information leaking and investors investing on that information market is Inefficient. Now for public they will never get that information early. So for regular person you can't beat the market.
Once he starts trading he’ll realise that all the “theories” against technical analysis are are to be take with a grain of salt. Plus this theory does non mention the human factor, people are unpredictable.
I have no interest in markets. I find putting in hybrid schemes to be more than satisfactory as I don't want to be taxed more on other incomes on income booms or bear unneccessary losses. I am studying for a financial management exam myself and the books make this seem like a mountain gorilla eating a lion. Thank you for the video.
221 Schiller Branch
I'm halfway through the video but doesn't hype break the theory of stocks being at market price?
We all have the same access to Tesla right now but people are demonstrating FOMO and the price is bloating.
This video largely went over my head though. I need to watch it one or two more times when I'm not busy.
Markets are not efficient.. if I make money...
I AM TAKING MONEY OFF THE TRADER THAT LOST IT
How does the efficient market hypothesis explain bubbles? Sounds very inefficient.
Chicken Genius sent me here
108 Jayne Lights
You didnt touch upon market inefficiencies and their reasons e.g behavioral
Mitchell Garden
Remington Spur
Did you say "Eugene"? Well Mr. Krabs is rich AF so he must be right. 😂
2235 Johnson Mountain
But maybe guys like Buffet just have permanent access to insider information?
all this nonsense. just buy gme, hold and profit. its that simple
Profits go BRRRRRRRRRRRRRRRR
🤡
Wait this ain't EMH the editor
Jedediah Orchard
Ona Radial
Schinner Trace