MKT EFFICIENCY QUERY

deepakkrkanodia
Finance Junkie
Posts: 49
Joined: Thu Aug 09, 2012 4:45 pm

MKT EFFICIENCY QUERY

Postby deepakkrkanodia » Sun Nov 18, 2012 12:34 am

what exactly do we mean by anomalies in market efficiency?

plz explain the line " The bottom line for investors is that portfolio management based on time series data, cross sectional data and other anomalies will likely be unprofitable"

according to my understanding, anomalies prove that markets are inefficient and so mispricing of securties is there. please tell if my understanding is correct or not.

if my understanding is correct, why does the above line says portfolio management will likely be unprofitable?

Regards

deepak

pankaj
Finance Junkie
Posts: 61
Joined: Fri Aug 03, 2012 11:24 am

Re: MKT EFFICIENCY QUERY

Postby pankaj » Tue Nov 20, 2012 9:23 am

Yes, your understanding is correct, but also there are some anomalies which can't be capitalized (very minimal difference in price) because the administrative and other cost incurred will be higher than the profit arising from capitalizing anomalies.

deepakkrkanodia
Finance Junkie
Posts: 49
Joined: Thu Aug 09, 2012 4:45 pm

Re: MKT EFFICIENCY QUERY

Postby deepakkrkanodia » Tue Nov 20, 2012 5:46 pm

pankaj

ok thx. got it

regards

deepak


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