What does semi-strong form EMH state about stock prices?

The semi-strong form of the Efficient Market Hypothesis (EMH) asserts that stock prices incorporate and reflect all publicly available information. This body of information encompasses not only historical price data but also financial statements, news reports, and other relevant data available to the public. According to this theory, it is impossible for an investor to achieve consistently higher returns than the market average simply by trading on this publicly available information, as market prices adjust almost immediately to new information.

This concept is crucial for understanding market behavior and the implications for analysis. If stock prices efficiently reflect all public information, then fundamental analysis aimed at uncovering undervalued or overvalued stocks would be less effective, as any new data would already be priced into the stock.

Other options do not convey the comprehensive nature of the semi-strong form EMH. One suggests that stock prices only reflect past price information, which would align more closely with the weak form of EMH. Another option states that stock prices do not react to public information immediately, which contradicts the semi-strong form's premise of instantaneous price adjustment to new public data. Lastly, a choice regarding the influence of insider trading relates to the strong form of EMH, which incorporates all information, public and private