From Fridges to EMH

OK, I can hear you. Now he is getting over the top - might be  - but keep on reading.

It came to my mind this morning on my daily commute and I believe it illustrates the shortfall of EMH pretty well.



For our customer we are currently working on a prediction model for all sorts of IoT equipment on their retail sites. This includes also fridges and deep-freezers. When analyizing the maintenance intervals for all retail sites we found some anomalies. In this particular case it was a shorter as normal maintenace cycle and we chased the reason. We found out that a construction work on site and a retail site power failure caused the shorter maintenance call. Or street work has been carried out and the air filter got polluted due to the dust during the hot summer month in germany.

EMH would tell you, just look at the IoT Data and everything will unfold automatically.

So you might have a Small - Cap investment, which can not react immediately to market news, simply because there is no trading - or no market making in place or simply the lack of volume. As a consequence those securities will decline with 1 or 2 weeks delay. However this is not a particular strength of this securties, right.

Worth looking at the bigger picture and don't use the convenient way, when it comes down to your investments.

Keep on drilling.

No comments :

Post a Comment

Further Readings