Why invest in one thing over another? (Part 2)
Key Points
- Whether you agree with it or not, having a sound understanding of the Efficient Market Hypothesis (EMH) is critical.
- Making active investment decisions requires factoring in all relevant and available information that may influence future performance and risk. This is a daunting task.
- Nevertheless, according the EMH, the market is able to do this seamlessly and instantly.
- According to theory, the markets have a way of equalizing prices such that all investment opportunities provide similar risk-adjusted returns on a go-forward basis.
Continue reading → Why invest in one thing over another? (Part 2)