According to the Article “What is Market Efficiency?”, what are:

Efficient Market Hypothesis (EMH)

An efficent market hypothesis says that no person can out preform the market, because at the end of the day everything evens out. Although it may seem like some people come out with better outcome, in the end some people buy low on the market but some people buy high, but someone has to be buying and selling whether it be low or high. The fluxuation of the market is unpredicable, but the market will always be ontop when everything is said and done.

Behavioral Finance

Behavioral Finance is when people believe that they have mastered the fluxuations of the stock market and feel that they can predict what is going to happen next, they begin making psychologicaly based theories about the market. People try and look at the market and find characteristic that will help create a long term prediction about the market.

January Effect

During the month of January there is an increase in stock prices due to many shareholders selling stock after the month of December because they feel like after christmas the stock has hit its peak and the fear of tax loss. Now that people are“using tax-sheltered retirement plans” the January effect has become more or less unimportant because there is no longer the fear of tax lose.

"How does a market become efficient?"

The ideas and schemes that investors come up with are what keep the market efficent. When pinvestors feel like they can beat the market they come up with irrational ideas that end up putting more money into the market, making it more efficent.