Course 501: Why Bother with Investment Theory?
Efficient Markets Theory
In this course
1 Introduction
2 Efficient Markets Theory
3 Modern Portfolio Theory
4 The Investing Pyramid
5 What Goes Where: The Art of Asset Location
6 Factor Investing
7 Behavioral Pitfalls
8 The Bucket Approach to Retirement Allocation
9 What’s the Right Foreign Allocation?

Burton Malkiel's A Random Walk Down Wall Street, first published in 1973, popularized this theory, which says that stock prices reflect all the publicly available information about the companies. Stock prices may not be "right," but they're as correct as they possibly can be.

There's no point in trying to beat the market, suggests the theory. Just index it.

Some, including most mutual fund managers, disagree. They feel that they can find mispriced securities, or opportunities where a stock's price does not accurately reflect everything about the company.

We'll explore both sides of the issue in Portfolio 502.

Next: Modern Portfolio Theory >>

Print Lesson |Feedback | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.