Choose one appropriate statement.

1. The movement of stock prices have certain patterns, and investors can make profits by studying such patterns.
2. If a hedge fund manager believes that Toyota will going to outperform Honda she will short stocks of both companies.
3. When one share of Apple stock is being traded at $150, the stock market believes that you can always sell a share of Apple stock for at least $150 in the future.
4. An undervalued stock should outperform the market in the long run.
5. Diversification is not appropriate because it would prevent investors from capitalizing on the superior return that can result from a concentrated holding of the stock of one successful company.

I think the answer is number 4. is it right? if not, explain, please.