I would suggest that one week—or even a couple of months in the context of COVID-19 -- of market price behavior really tells us little about EMH. A lot there probably depends on just which version of that theory you want to apply.
Quick follow up regarding your last point about small nibble-large slow. I just saw this bit on CNBC. You might need to wait and see what the quarterly income reported from the investment banking/trading side of the house for these large financial houses.
Depending on both your assumptions about the degree of information asymmetries and version of EMH, EMH can be seen as saying the retail investor and GS cannot beat the index so both should achieve the same investment outcomes. That would be one extreme.
I think the reality is that GS out competes the little guy on two factors: a) ability to actually do the research and make better assessments of the publicly known information (Give me the GS database and I will still not know what the GS analytical team knows, and definitely not in a useful time frame) and b) institutional factors that allows GS relevant but non-public information (e.g., order flow) and they also generate information that is relevant (new product type things).
Part of that is relevant to trading activities but part is going to impact long term, investment results.
I would suggest that one week—or even a couple of months in the context of COVID-19 -- of market price behavior really tells us little about EMH. A lot there probably depends on just which version of that theory you want to apply.
Quick follow up regarding your last point about small nibble-large slow. I just saw this bit on CNBC. You might need to wait and see what the quarterly income reported from the investment banking/trading side of the house for these large financial houses.
Doesn’t the EMH imply that small active investors shouldn’t be able to beat the market / compete with Goldman?
Depending on both your assumptions about the degree of information asymmetries and version of EMH, EMH can be seen as saying the retail investor and GS cannot beat the index so both should achieve the same investment outcomes. That would be one extreme.
I think the reality is that GS out competes the little guy on two factors: a) ability to actually do the research and make better assessments of the publicly known information (Give me the GS database and I will still not know what the GS analytical team knows, and definitely not in a useful time frame) and b) institutional factors that allows GS relevant but non-public information (e.g., order flow) and they also generate information that is relevant (new product type things).
Part of that is relevant to trading activities but part is going to impact long term, investment results.