Distinguishing the Efficient Markets Hypothesis from the Random Walk Theory : Historical Based Information as Reliable Information Predictors

Even though the Efficient Markets Hypothesis (EMH) is also commonly referred to as the random walk theory (Clarke et al, 2001:1), there are several reasons why both can be distinguished. Amongst other objectives, this chapter will also aim to illustrate why the semi-strong and strong forms of the Efficient Markets Hypothesis appear to accord, to a greater degree, with the random walk theory whilst the weak form of the EMH increasingly appears to be contradictory to the random walk hypothesis – in terms of predictability – and based on past information