The use of moving averages may produce superior investment results according to

Question

Quizplus · Accepted Answer

The weak form of the efficient market hypothesis suggests that all past trading information is already reflected in stock prices, and thus, investors cannot achieve superior gains through technical analysis, which includes the use of moving averages. However, the statement that moving averages may produce superior investment results contradicts the weak form's assertion that past information is fully reflected in prices. The other forms (semi-strong and strong) assert that even more information is accounted for in stock prices, making it even less likely for moving averages to provide an advantage, thus making none of the forms supportive of the idea that moving averages can lead to superior investment results. My explanation was incorrect; the correct interpretation is that none of the forms of the efficient market hypothesis support the idea that moving averages can consistently produce superior investment results, as all forms assume that market prices reflect all available information to some degree, making it impossible to consistently outperform the market through any analysis, including the use of moving averages.

The Use of Moving Averages May Produce Superior Investment Results