IS THE STOCK MARKET PREDICTABLE? | Efficient Market Hypothesis

📣 FREE OPTIONS TRADING MASTERCLASS | skyviewtrading.co/3hSXfCx
Is the stock market predictable? Many would argue YES... But the Efficient Market Hypothesis says that it's impossible to “beat” the market because all current and relevant information is already factored into the stock price.
Most traders defensively argue against this theory because if it were true, then that means they can’t outperform the overall market… So why even try?
It is up to you to decide for yourself...
We, on the other hand, are advocates of this theory that the markets are incredibly efficient. But we see it as a GOOD thing because we know that as long as we are trading liquid assets, the pricing is always very fair.
In this video, we show you a demonstration of Market Efficiency, and we also explain what this means to our trading.
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[@skyviewtrading]

🚨 Hey all, thanks so much for the great feedback on these videos! For those of you requesting more content, we put together an Options Trading Masterclass for you, 100% free. We dive further into our strategies and trading style. If you’re interested, check it out here - skyviewtrading.co/3hSXfCx

[@mykasiurka]

Nice Video! Excuse me for the intrusion, I am interested in your initial thoughts. Have you heard the talk about - Sanames Stockify Scripophily (erm, check it on google should be there)? It is a smashing one of a kind guide for discovering the best options trading technique without the normal expense. Ive heard some awesome things about it and my old buddy Taylor after many years got cool results with it.

[@nadiayvonnerazanajao7082]

Thanks for the video content! Forgive me for chiming in, I would appreciate your thoughts. Have you researched - Sanames Stockify Scripophily (do a google search)? It is an awesome one of a kind guide for discovering the best options trading technique without the hard work. Ive heard some pretty good things about it and my m8 finally got great results with it.

[@aw7108]

How dare you teach such a broken theory to people who don't know any better? Watch this and tell me why this video is still up. kzbin.info/www/bejne/ppvEoXVmmc-hitU

[@user-rc6qo5zs8q]

BS! It is the big banks that are moving prices up and down.

[@smartessel1305]

Hey Adam, I really like your videos. It really made me love trading stocks, most specifically option trading. Your explanations are down to earth. I would like to know if I can apply the same strategies on other brokers who aren't in US? The reason I haven't joined sky view trading is because I don't any broker to open an account with and apply your strategies and make profit. Is there any way you can help? Thank you.

[@jacoboribilik3253]

this is precisley the without-going-into-detail explanation of what the HME is I was looking for, thanks.

[@stevepatterson1124]

You forgot one very important fact. In order for all the information to move price to the "efficient" level someone or group of traders would have to have know the "information" before it gets to that level. Traders simply do not understand the drivers behind a market and that is why traders fail.

[@davegriffin9746]

Great video -- much appreciated !

[@uniqueurl]

Still there are traders (HFT often), who makes money from the difference between underlying and it's derivative. So how could that pricing be efficient ?

[@paulnyagini]

Price is efficient because it comes to the average. HFT are front runners meaning they get price advantage. The same concept is used by the brokers were they get price advantage by using spread/slippage.

[@CanadianFinanceSimplified]

This video is awesome! Even if I'm checking this out 5-6 years later!

[@skyviewtrading]

Thanks so much!

[@nydimka23]

Great Video!!!

[@amomasi9909]

Just found you. Subscribed!

[@TheTaquitoProject]

Well, the people who predicted the '08 crash did so based on the mortgage backed securities that caused it. Not based on the "head and shoulders double black cross of DOOM."

[@sirt8684]

I agree. There was definitely a lot more than luck when those people picked the crash. they knew where there's smoke, there will be fire.

[@toodle171]

Currently anyone NOT paying attention to small business defaults and the landlords who cater to that have the same head up the same @$$. BTW that also includes EVERYONE who bought a house in the last 3 years to rent out.... Such pain to come. Lot's of MOM and POP have gone under...

[@nick55tv]

Great video, thanks!

[@skyviewtrading]

Thanks for the feedback! Glad you enjoyed it. More to come!

[@yogeeswarpal]

Yo! your videos are great and very helpful, I remember you mentioning about predicting Volatility, is it Index VIX or individual stock you are talking about? and how to do it, knidly make a video about it if possible

[@lauietrekker]

How do you make these video's? What program do you use?

[@farshid14]

What program do you use as the presentation?

[@MrHav1k]

If it's always efficient though, then why would there even be crashes like the great recession in 2008, or the dotcom bubble? If it's efficient, wouldn't all of that be priced in and the markets never wildly rise or fall at all? How does EMH handle blindside events like that?? Loving the content by the way. I intend to watch every video you've got up on this channel lol.

[@fernandoecamp4462]

good point

[@CanadianFinanceSimplified]

I'm late to the party but want to increase my understanding since I'm starting my own channel. I think large price swings do not suggest inefficiency. The prices should be able to swing wildly on unexpected news that is either really good/bad.

[@MrSupernova111]

I have to say, as someone about to graduate with a degree in finance and someone who manages his own portfolio you just about nailed it. The only thing I would add is that markets are not always efficient. One reason is because there is a herd effect in the market which causes short term misprizing. Another reason has to do with timing although markets are notoriously quick to correct. I'm looking to learn more about options so I'll check out your other videos. Again, great job! Thanks!

[@paulnyagini]

You must go back to school and learn the concept of zero sum game. Unlike in casino were the outcome is based on distribution in the market the outcome is based on liquidity this is the primary reason why the market is very notoriously quick to correct.the market is always efficient. And all of trading strategy are pure gambler fallacy. The early you learn that the easier is going to be for you to be consistent profitable.

[@toddkobell4441]

I would disagree, there is the studio of institutions trading with backtested algorithms and others with humans. Guess which institution outperforms the other by 400%? Algorithms

[@bipinsingh1]

Hi... awaiting for your new vedio on volatility n time decay in options.. Thanks

[@ajkorras]

No counter-arguments? You make EMH sound like a religion. You forget who is using the market: people, which means that there is plenty of behavioral action going on.

[@skyviewtrading]

We're just presenting the idea to you. You can decide for yourself if you support the theory or not.

[@teroliikala]

You sure didn't make it sound like you're just presenting an idea.

[@teroliikala]

This...

[@pratikjain9018]

ajkorras i agree you.

[@archvaldor]

Yes, markets are run by people. Now try and create a systemic method of exploiting that. It sounds easy but no one has really managed to provide convincing proof with a statistically significant sample size going forward. I'm not a believer in EMH but I'd say most of the stock market is very efficient.

[@curcumalongarhizome1622]

great video! whats the outtro song btw?

[@skyviewtrading]

Thanks! It's a remix of a Martin Garrix and tiesto song called "The Only Way Is Up". The remix isn't available online though but you can of course look up the original.

[@00076Paint]

You could get a better deal on a stock when you buy it when the stock is oversold due to panic selling.

[@skyviewtrading]

That is correct, but there is no guarantee that happens at any time!

[@MarviRafaelMontecillo]

i'm new to trading but this sounds very much like what nassim taleb describes in his book "fooled by randomness"

[@kennethdichiara6100]

Hi, I just subscribed to your channel. I’m new to this and trying to learn as much as possible. Just wanted to ask what program do you use in the video to view options??

[@MrRahul169vicky]

wow man... just found ur channel... u r superb.. Thanks a ton... from India.

[@skyviewtrading]

Thank you! We appreciate the kind words. Motivates us to make more :) Many more videos to come. Cheers!

[@manelb8104]

This video doesn't really justify why options would defeat the Efficient Market Hypothesis, under this hypotheses increasing the probability of success just decreases the potential gains on the same proportion because that's the fair pricing, keeping the expected value at 0 (not counting the fees you'll have to pay) so you are still on the same boat.

[@jasonavina8135]

absolutely, it doesn't justify the EMH at all it presents a highly debated hypothesis as a FACT and doesn't show any evidence from the other side. Its a lazy, bad explanation.

[@ferdousadnan5814]

What Tool/Software is used to make this video??

[@buckminsterfullerene2294]

Do you have anything to say about crypto currencies any insight

[@Mahetab.khan.]

waiting for another excellent video, so much knowledge in just lil slides wonderful indeed

[@skyviewtrading]

Thanks so much. We're already working on the next one!

[@mutombomayele399]

Would you like to answer my question? How does information system affect market efficiency? kind regards

[@JeffMartinez648]

As usual great work Adam.

[@skyviewtrading]

Thanks, Jeff! See you in the chatroom!

[@TheGodParticles]

Though the stock market may be efficient its speed to truth varies. Time gets to the true value eventually 100% of the time. Human events and environmental factors effect price. Being the guy that knows the factors and their effects can have an edge on the other guy that doesnt. THAT IS WHY PROS WANT YOU TO PAY FOR THEIR ADVICE.

[@charleskkakareka]

I'm in the market for the right course. What information can you provide as to why I should choose this one? I'd like to hear some reviews and successes of your students, plus what you've managed to accomplish.

[@skyviewtrading]

Charles, shoot us an email on the homepage of our website and we'll send you some info!

[@rayraycthree5784]

The market is often overpriced or under priced due to the greed or fear of mob think! A market that drops suddenly after a traumatic event that doesn't really affect the economy is the easiest to identify as under priced but they don't come all that often and you could lose out on earler gains by staying in cash while you wait.

[@nick55tv]

Also would you consider making videos on small cap stocks. I just bought shares in $SAKL and am learning how different small cap investing can be.

[@skyviewtrading]

We will eventually. But I'd highly suggest you start venturing into the world of options trading. There really isn't much edge to be had when trading small cap stocks (in my opinion).

[@serenahussain2072]

i have homework question: Very risky stocks on average yield higher returns than relatively safe stocks. Is this a violation of market efficiency? how can i go about answering this?

[@CanadianFinanceSimplified]

What's you end up answering as your homework? Just like stocks return more than bonds, you should be rewarded with high reward for taken on more risk (in risky stocks).

[@cjorg16]

Your presentation Ignores a lot of data that goes against the assumptions of the EMH. Even a brief study of the markets and human nature, will lead one to quickly see how people, their reactions and common errors affect how market behave. The field of behavioral finance can explain far better these market behaviors which mostly go against the assumptions of the EMH. If you believe the EMH, that's ok for you and your trading style. One should trade in a style that fits their beliefs. But describing the EMH as if it is a fact, and implying that no other styles of trading will work, nor have an 'edge', is either arrogant or ignorant. There is a very long list of very successful traders with audited results (aka Market Wizards), each using a wide variety of trading styles, that have found how to make their style work very consistently. Its ok if you have found your style based upon your beliefs...but that does not mean that other beliefs or styles are not just as successful, if not much more successful.

[@HemantPandey123]

Buying and selling is emotional decision. Emotions are not efficient and hence the hypothesis of EMH is a paper tiger. We all know that jewellery is not worth the cost + making charges but emotions made us believe that.

[@wulphstein]

The people who predicted the stock market crash saw signs of weakness in the economy.

[@fingerscrossed2453]

Can anyone explain the relationships between options and stocks? And how one can be used to inform choices on the other.

[@Finlzz]

Options give you the ability to buy or sell stocks at a predetermined price. This channel has a 4 part series on it.

[@skyviewtrading]

Good feedback here! Options are a cheaper way to participate in speculating on stocks. They also have an ability to implement more sophisticated trades than just betting on a stock going up or down. The option market also has neutral trading strategies.

[@fingerscrossed2453]

@@skyviewtrading thank you. You make very informative videos. Am I right in believing that if I sell an option, I have to fulfill the conditions of it for the person I sell it to, if they choose to exercise the option? Also, in which ways are options neutral?

[@JA-wp6cj]

Buffet sure did get lucky 😉. Seriously though, index funds for 99% of us are best.. Markets grow over time...

[@ambismagee3207]

Man - you guys do some good videos. Have you quit youtube or just taking a break?

[@skyviewtrading]

We just took a break to build the rest of our services and education out for our members to our website. We'll be back to posting KZbin videos again soon! Thanks for the comment. Glad you're enjoying the videos! Also, make sure you sign up to receive our free 3 video series. I think you'll enjoy those videos! www.skyviewtrading.com/free-lessons/

[@joelow63]

The market is predictable but not 100% But you can research and see what happens Its not just chance Like warren buffet always beat market and so did other people did using his strategy Synthetic stock is short plus long Nothing is ever mispriced it is only bades on prople emotions take adv. Of this Options?

[@RLShenans]

Did no one see the big short?

[@grf73tube]

You said you make profits by trading options, the question is: can you beat the market by doing that? If you just buy an S&P500 fund you will also make a profit in the long run.

[@maxican28]

Not that the market is not efficient but, what about an over reaction of a news that appear to be worst than it is? it would bring the price down for the wrong reason like CMG a couple years ago. Or some stocks can be undervalued or overvalued. I am pretty sure cigarette,oil company will go down and I am pretty sure renewable energy stocks will go up.

[@LalitLaxmi0212]

it is much probablity rather than prediction.

[@abdulghaffar7409]

I have Question : would trading like this basically be like gambling ???

[@nobodycares3900]

abdul ghaffar not really. Their is strategies and methods that is used in stocks market

[@matallen8222]

Your video is on under the wrong title this was not the stock market for beginners also you spoke in circles to mislead and confuse people

[@squeekmusic691]

Forget to include "gamblers fallacy"? that 11th coin still has 50/50 odds

[@jhutt8002]

Efficient market hypothesis is just plain wrong. Here's two reasons why: 1) It expects investors to be rational, and no person ever is or has been perfectly rational. This causes biased movements on supposedly "perfectly rationalized " stock price. 2) It expects every person to have equal level of knowledge and understanding of the industry stock is in. That's just not true. On average people have average knowledge that results in price reflecting the AVERAGE sentiment of the stock. Not factual worth. And I here's a proof for that: Follow the news. Today stock I've been following started to fall: In morning it was -1 % when press handout came out. It stayed around that until industry news covered it around 12:00. Price fell -2 % From those both it somewhat slid upwards until 15:55 newspapers covered it, and price fell -4%

[@almir5836]

EMH is not correct and not effective at least because of Behavioral Finance

[@virajk1336]

Yes markets are efficient. But 90% investors are fools, resulting some shares to rise more than they need to(cause of over-buying by those 90%) and some shares fall more than they need to (cause of over-selling by those 90%), That's why to outperform market you just need to buy cheap shares and sell expensive ones.

[@seanmastro6782]

He makes his money by Selling the Puts or Calls to the people that do not understand that Market Efficiencies Exist.

[@Ninlarr]

At 3:37 the author of this video falls victim to the gamblers fallacy. In short, the odds of a coin landing heads or tails is always 50%, regardless of the previous result. This applies to all chance based algorithms.

[@WolfAngelRock]

He wasn't calculating the probability of the 10th coin flip being heads, he was calculating the probability that out of 10 coin flips all 10 would be heads. He did it correctly, too, using the binomial distribution, although he omitted a couple of details because for this example they were trivial (two cases of multiplying by 1).

[@BlackOrkid777]

EMH isn’t the law of the land. Corrections wouldn’t be a thing if EMH reigned supreme because the market would always be perfectly priced in. There would be no need to correct. Hell, a perfectly efficient market as a given wouldn’t even support the idea of recessions or depressions. Take this video with a large grain of salt. There is plenty of benefit to learning technical analysis and doing extra reading on companies.

[@troytrentham3516]

Respectfully disagree. The fact that certain investors or traders (Warren Buffet, Paul Tudor Jones, Ray Dalio) have beaten the markets over very long careers shows that markets are not perfectly efficient. It is possible, although extraordinarily hard, to beat the market over ones lifetime and the fact that people do suggests markets are not perfectly efficient.

[@troytrentham3516]

Moreover, EMH suggests the market is always correct. The market is made up of humans or algorithms developed by humans - this would mean that humans or their trading technologies are always correct. This is self evidently impossible as we know humans are not always correct nor are their algorithms.

[@troytrentham3516]

After saying that, nice video. You have a new subscriber!

[@richardhowell7725]

Seven minutes of my life have been wasted. People who buy the dip make money. This has been true since 1929 - the ultimate dip that I wish my great-grandpappy would have bought. Those who aren't into buying the dip, figure out other ways to turn a profit. It's as easy as that. But to suggest that we're all turning profit because of "luck" is pure horse crap.

[@MrKamaboko]

how are naked options affected by HFT activity? I did a paper trade on NVDA and I saw it hit past my mark of 112 all the way down to 107, but on the weekly chart it shows the lowest price only hit 112.60 So what I'm asking is how would my naked 112 put have been affected by the few seconds/milliseconds that the price was at 107?

[@wulphstein]

This is 20th century thinking, or maybe 19th century thinking. I'm out!

[@jackmiddleton2080]

Cap potential with high probability of gains... Why not just buy bonds then?

[@trixy8669]

The market is very clearly inefficient lmao

[@b.a.b7834]

it's not a theory at firs place

[@skyviewtrading]

Thanks for the comment!

[@vtalfie]

Total BS...EMH is a joke. Market crashes would never happen if what you're saying is true.

[@eoingreen4716]

The opening theme "Martin Garrix - Break Through the Silence"?😉

[@skyviewtrading]

Eoin Green close! Martin Garrix - The Only Way Is Up

[@eoingreen4716]

Sky View Trading ah yes very good! Thanks for the video exam tomorrow really helped !!

[@skyviewtrading]

Awesome glad to hear it! :)

[@antonycostantine2457]

it is predictable he is wrong

[@jsiszero]

Biased video to sell and promote your courses.

[@AnilManandharnepal]

dude...really worthless video.....in the cricket some time Australia get beaten by Bangladesh...but it doesn't mean that Bangladesh is better team than Australia...the only matter in how many matches do the Bangladesh could beat the Australia in 5 ODI series. It's fine sometime analysis get wrong...you can be winner in stock market if your 80% of your analysis (both fundamental and technical ) is correct

[@hsk8787]

This guy has noooo clue what his talking about

[@okselaw]

Never saw so much follishness reunited

[@dalerekus]

Dumb video on EMH, EMH is fallacy. EMH is based on LOGIC. Market is based on human EMOTIONS.

[@samiswilf]

Poor video. A good one would have started with the definition of efficient. This video didn’t making the entire video meaningless

[@virajk1336]

Yes markets are efficient. But 90% investors are fools, resulting some shares to rise more than they need to(cause of over-buying by those 90%) and some shares fall more than they need to (cause of over-selling by those 90%), That's why to outperform market you just need to buy cheap shares and sell expensive ones.