Efficient market, momentum, mean reversion...

No math. High priority knowledge!

In the following post, I’m going to introduce the Efficient Market Hypothesis and the empirical deviations from it. I will explain what momentum is, introduce the concept of mean reversion—all to help you understand a century of observations on how the market behaves.

HISTORY, BACKGROUND
The relationship between supply and demand and its impact on prices is one of the most fundamental questions in trade, business, and economics.
Modern money and capital markets exist to direct capital to parts of the economy where it is needed for production. Households, as the largest savers, invest their unused income through capital markets into companies and governments that lack funds. Like buyers in commodity markets, these investors carefully select their investments and expect comprehensive information on each opportunity.
Naturally, they want the highest return for the risk assumed, whereas capital users seek the lowest-cost funding.