Part A (a) A technical analyst states “Every day I check the price patterns from the day before to identify the shares I

[answerhappygod]

Part A A A Technical Analyst States Every Day I Check The Price Patterns From The Day Before To Identify The Shares I 1 (236.47 KiB) Viewed 50 times

Part A (a) A technical analyst states “Every day I check the price patterns from the day before to identify the shares I wish to trade that day”. i. What do the efficient market hypothesis say about the effectiveness of this statement? [5 marks) ii. What do the behavioural finance hypothesis say about the effectiveness of this statement? (5 marks] a (b) The Motley Fool Stock Advisor has been one of the best stock pickers in the United States for the past two years. The Motley Fool showcases that their Stock Advisor picks have delivered nearly five times the returns of the S&P 500 since their inception, as of April 2021. That's a cumulative return of 585% compared to the S&P's 136%. Before this rise to fame occurred, the Motley Fool newsletter had 5000 subscribers. Those subscribers beat the market consistently, earning substantially higher returns after adjustment for risk and transaction costs. Subscriptions have skyrocketed to 200,000. Now, when the Motley Fool recommends an equity, the price instantly rises several points. The subscribers currently earn only a normal return when they buy recommended shares because the price rises before anybody can act on the information. i. Briefly explain this phenomenon. [4 marks] ii. Is Motley Fool's ability to pick winners consistent with market efficiency? Discuss your point of view. [6 marks]