Debunking Efficient Market Hypothesis (What They Don't Tell You)

Is the Efficient Market Hypothesis the biggest myth in finance? In this deep dive, I break down exactly why EMH is fundamentally flawed and what this means for your investment strategy.

The Efficient Market Hypothesis claims that stock prices perfectly reflect all available information, making it impossible to consistently beat the market. But is this actually true? In this video, I systematically dismantle this theory using both observation and logic, revealing over a dozen critical flaws that prove markets are far from efficient.
What You'll Learn:

Why stock prices move faster than information changes (3:40)
How different timeframes destroy market efficiency (5:49)
The role of stock buybacks, dividends, and tax strategies (4:38)
Why participants have completely different motivations (3:54)
The difference between weak, semi-strong, and strong form EMH (1:39)
How to think critically about financial theories (15:11)
Why markets track services, not goods (13:22)

This isn't just about disproving a theory—it's about understanding how to think critically about any model or hypothesis. Whether you're an active trader, long-term investor, or just curious about financial markets, understanding why EMH fails will change how you view the stock market forever.
Key Takeaway: Markets reflect the pressure to move prices at any given moment, not comprehensive information. Understanding this fundamental difference can transform your investment approach.
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00:00 - Introduction to Flawed Models
00:34 - What is Efficient Market Hypothesis?
02:52 - First Flaw: Prices Move Faster Than Information
03:46 - Second Flaw: Participants Have Different Motivations
04:33 - How Stock Buybacks Disprove EMH
05:44 - Third Flaw: Traders Use Different Time Frames
08:04 - Fourth Flaw: People Hold Stocks for Counterintuitive Reasons
10:32 - Fifth Flaw: Not Everyone Sees Info at the Same Time
14:17 - Why Has This Myth Persisted?
15:07 - Using Science Correctly to Disprove, Not Approve
18:13 - The Danger of Idealistic, Flat Views of Complex Systems
20:01 - The Importance of Being "Correctly Critical"

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Animation by Yana Petkova - music by Rizzi - editing done by Sarah Toto
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