Question
According to the EMH, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks
According to the EMH, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices. Therefore, it should be impossible to outperform the overall market through expert stock selection or market timing, and the only way an investor can obtain higher returns is by purchasing riskier investments.
Wall Street still believes that Alibaba stock is heavily undervalued. There currently is a whopping 75% consensus share price upside on BABA, based on average price target of $265 suggested by 25 sell-side reports issued in the past three months. Critically discuss this statement in relation to EMH.
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