Warren Buffett Warns of ‘Terrible Mistake’ Many Investors Make, Urges Caution
Key Takeaways
- According to the EMH, stock prices reflect all available information, suggesting that it’s impossible for investors to find undervalued stocks.
- Buffett argues against the EMH by pointing to examples of value investors, including himself, who have outperformed the market.
- Still, Buffett recommends that non-professional investors should choose low-cost index funds because successful value investing takes time and expertise.
The legendary investor Warren Buffett has repeatedly denounced the efficient market hypothesis (EMH), which claims that stock prices reflect all relevant information and always trade at their fair value. Beyond simple luck, this should make it impossible to consistently beat the market. Pointing…
