This podcast delves into the Efficient Market Hypothesis (EMH) and what it means for investment strategies. The speaker starts by explaining the EMH and its recognition with a Nobel Prize, then illustrates how markets forecast future events using examples like interest rates and the VIX. The main focus is on evaluating the EMH's validity, supported by evidence from event studies and a comparison of market predictions against expert opinions. The discussion also identifies potential gaps in the EMH, such as value and momentum factors, and how they can be applied in building investment portfolios. The conclusion acknowledges that while markets are generally efficient, certain strategies can provide risk-adjusted returns. Notably, the podcast points out that momentum strategies have consistently outperformed since 1985, despite accompanying risks.
