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How does herding cause the efficient markets hypothesis to not work?

How does herding cause the efficient markets hypothesis to not work?

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Herding cause the efficient markets hypothesis to not work because the efficient market hypothesis tells that Stock prices reflect all the important information, they are neither undervalued nor overvalued. Stock prices can be predicted based on past history but these do not change based on past performance. One big news is enough to bring the market down or up then no theory works.

Investors who buy blue chip stocks with good fundamentals, gain profit. There is one strategy in the stock market that is; High risk, High gain. Risk can be reduced by diversification.

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