Warren E Buffett’s Approach on the Ehm
Introduction
In every organisation the management team set their investment and financing decisions to set their goals with the help of corporate finance objectives set. Corporate finance is the study which deals with such objectives involved in financing and investment set target. Mostly the investment manager’s goals are always define by in order to maximise the profit with minimum investment and to have lowest risk of market valuation. (Watson and Head, 2010).
Warren Buffet, the billionaire value investor our assignment is related to his work and thoughts process related to debt financing. American investor, highest shareholder head person and CEO of Berkshire hatchway is Warren Edward Buffet. Most intelligent and definite investors with proper investment decisions understanding the finance market. He being following the different methods and having methods calculating and analysing the finance market unusually and making decisions implementing his own strategy making his strong positions in finance market. In which he always been considered as an outstanding and influences decisions maker with his investment decisions are concerns. Efficient Market Hypothesis (EMH) is being not recommended by Buffet as he believes the output is not so definite and rather following the other approach. Buffet also does not follow the normal market anomaly. Buffet new investment approach will be avoiding the debt finance investment in his portfolio. As in Buffets’s approach as being some advantages as well as disadvantages also. As he being at such position in the finance industry it cannot be denied the perspective and the thinking process the techniques being used for it with considering the theoretical knowledge. Considering the techniques and the approach methods used it will be helpful understanding the perspective of debt market and also working with more efficiently on equity market.
Warren E Buffett’s approach on the EHM:
Defining efficient market hypothesis is related to making the prices of capital market securities and implementing price of the shares with all relevant information and making the available all sources for making finance decisions. (Fama, 1970).
EMH have three various forms as per Watson and Head:
Weak Form Efficiency: It shows the exact present share price of historical information considering the past performance. Mostly decisions are taken considering the past performance and which reflects the outcome of possibility results and not making much of the errors.
Semi-Strong Form Efficiency: In this method it not only reflects present scenario of market share price but also make it available the past and overall performance. This helps making accurate decisions about the share price considering the information available it also helps to make decisions more efficiently and accurately.
Strong