Efficient Market Hypothersis Essay Example | Topics and Well Written Essays - 2000 words

Efficient Market Hypothersis - Essay Example While the extent of the validity of these criticisms remains debated, the efficient-market hypothesis (EMH) has held a pronounced influence on political and academic thought. This essay considers the extent that the market, as Warren Buffet claims, functions under irrational processes, or can be explained in rational terms through the efficient market hypothesis. Outline of the Efficient Market Hypothesis (EMH) In its modern incarnation Professor Eugene Fama first articulated the efficient-market hypothesis in the early 1960s during his time at the University of Chicago Booth School of Business. From an overarching perspective, the efficient market hypothesis theory contends that for investors it is impossible to ‘beat’ the market on a consistent basis. The main reasoning behind this notion is that the market will reflect all available information for the particular investment, such that gaining any sort of edge over other investors is made impossible. This contention do es not necessitate that individuals act in rational ways. Indeed, the efficient market hypothesis understands that a number of individuals will both over and under react to available market information. The cumulative impact of these reactions results in market efficiency, as the random reactions will fall proportionally along a normal distribution pattern. In these regards, it’s possible for an individual to be right or wrong about the market, but the market itself is necessarily an accurate reflection of available asset information. Structural Components There are three major versions of the efficient market hypothesis, each of them resting on a different part of a spectrum of efficiency. The first version is the weak-form efficient market theory. Within this perspective all prices on past publically traded assets, including stocks, bonds, and property, already have factored into them all publically available investment information. The semi-strong version of the hypothesis takes this a step further and argues that current asset prices reflect all publically available information and that when new information emerges prices change instantly to reflect this new public information. The third version of the efficient market hypothesis is the strong-form version. The strong-form version of the hypothesis goes even further in that it argues in addition to asset prices immediately reflecting public information, asset prices also instantly reflect insider or otherwise concealed information. Analysis Seminal Literature There are a number of seminal studies that established core elements of the efficient market hypothesis. While Fama first articulated the theory in its modern context, its original formulations were explored as early as the 19th century. Kirman (2009) notes that French mathmetician Louis Bachelier established many of the general tenants of this theory in his ‘Theory of Speculation’ published in 1900. The early years of the 20th cen tury witnessed another prototypical formulation of this perspective in the random walk model; this was a notion that stock prices operated through random steps and as such gaining a long-term predictive edge was

The Influence of Family Essay Example | Topics and Well Written Essays - 5000 words

The Influence of Family - Essay Example This influence is often reflected in the childhood and adult life of the child. According to various researches, it has been proved that, children always associate themselves with the problems of the parent and worry about these issues even if they are not part of the problem. This is a regular experience faced by families which have divorced. This is the main reason why individuals ask themselves if the family can influence the way they think, act and feel in the society. It is true that the family plays a significant role in the way individuals behave in the family and society. Every concept an individual adopts are learned from the family. For instance, everything a child learns is always influenced from his or her parenthood and how they reacted to their parents. Parents are good people to emulate as they are familiar with what life entails. This is due to their life experiences. They are essential in teaching their children what they have learned, how they should act, think and feel about the modern society. However, some parents are not good role models to their children. As in the case of Cary, whose life will be discussed in the papers’ body, her mother was never a role model. Her mother was full of hatred and brought her up in a manner that she never liked. As such, she vowed to bring her children up in a manner that was completely different from her mothers. However, Cary’s mother case contradicts the claim that mothers are the primary caregivers. Mothers are considered as the primary care givers and consequently being viewed as the most influential to the child’s life. However, recent psychoanalytical studies have shown that fathers have a major role to play in influencing the behaviors and thinking of their children. The parent’s behavior can be explained from their past experiences or prominent figures in the society which they look up to and desire their children to emulate. Young maternal age is usually associated to with harsh and abusive parenting (Smithbattle 521) which can be explained by the fact that most young mothers are mostly poor and at risk of social isolation. They also go through depression and stress making them harsh and abusive parenting. However, these are not usually the only factors affecting the influence that a parent has to his children. Some parents may have prominent figures in the society who they want their children to grow up to emulate and they therefore train them to be like to people. Griffin also brings out the fact that a parent’s control over the family can have an influence on the child’s life (Griffin 302). A child whose parents exercise full control of every aspect at home grows to learn what ask and what not to ask. In exercising so much control in the family, children may not feel good while within the family and when faced by a problem they withdraw to cry alone as seen in Laura’s family (Griffin 307). Apart from the influence one gets from the family, the society plays a great role in influencing a person’s behavior. Moreover, after getting to a certain age, one starts becoming self aware and it is at this time that they start erasing whatever they do not need and developing their desired qualities. The essay on the loss of a creature by Percy tries to expound on the influence of the past knowledge and experiences to the sightseer in their visit to the tourist sites. According to Percy (2), precedent experiences and awareness determines the nature of leisure and enjoyment in any vacation. The prospects of the visit have a role to play in assessing and evaluating the intensity of satisfaction in any tour. Sightsee that satisfies the goal and objective of the vacationer