The Relationship Between Actual Price and Intrinsic Value: Evaluating Efficient Market Hypothesis in the Short and Long Term Today

This paper examines the relationship between actual prices and intrinsic value, evaluating the Efficient Market Hypothesis (EMH) in both short and long-term contexts. While EMH suggests prices reflect all available information, short-term deviations occur due to behavioral biases and market shocks, amplified by the rise of retail investors. Over time, improved regulations and market mechanisms align prices with intrinsic value. The introduction of artificial intelligence and big data analytics may mitigate human biases and enhance market efficiency. Although perfect efficiency is unlikely, advancements in technology and regulation are narrowing the gap between theory and practice.

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Publication Details

Journal
Journal of Education Humanities and Social Sciences
Published
2025-03-19
DOI
https://doi.org/10.54097/3rxp2404
Primary Topic
Financial Markets and Investment Strategies
Type
article
Field-Weighted Citation Impact
0.00
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article

The Relationship Between Actual Price and Intrinsic Value: Evaluating Efficient Market Hypothesis in the Short and Long Term Today

Z. Nora Tu
Journal of Education Humanities and Social Sciences
Financial Markets and Investment Strategies
article

The Relationship Between Actual Price and Intrinsic Value: Evaluating Efficient Market Hypothesis in the Short and Long Term Today

Z. Nora Tu
article en

Abstract

This paper examines the relationship between actual prices and intrinsic value, evaluating the Efficient Market Hypothesis (EMH) in both short and long-term contexts. While EMH suggests prices reflect all available information, short-term deviations occur due to behavioral biases and market shocks, amplified by the rise of retail investors. Over time, improved regulations and market mechanisms align prices with intrinsic value. The introduction of artificial intelligence and big data analytics may mitigate human biases and enhance market efficiency. Although perfect efficiency is unlikely, advancements in technology and regulation are narrowing the gap between theory and practice.

Journal of Education Humanities and Social SciencesVol. 48
University of Warwick (GB)
Openalex Percentile: Top 69%
Financial Markets and Investment Strategies
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