Stock market efficiency debunked: Prepare for unpredictable financial rollercoaster!
The study tested the idea that stock prices follow a random pattern, which is a key part of the efficient market hypothesis. The researchers found that most stock indices do not follow this random pattern, rejecting the hypothesis of financial markets being efficient in a weak form. This result aligns with previous studies that also questioned the efficiency of financial markets. The classical theory struggles to explain abnormal returns like bubbles and crashes, which supports the rejection of the efficient market hypothesis.