Limited Stock Market Predictability And Its Investment Philosophy Study

Efficient market hypothesis assumes that price in an effective stock market varys stochasticly. It reflects the equal distribution of information of same quality. In other words, nobody can make profit from analysing past information. But the theory of chaos expressly points out that the wave of price in the stock market can be predicted, relevant their research proves that cycles and trends exist.In this thesis the author tries to prove that the wave of price in the stock market is predictable finitely with theory and practice. As a matter of fact, trends, time cycles and price cycles are characteristic of the wave. At the same time, prediction itself cannot provide absolute precision, and it's finite.Be that as it may, according to the confirmation principle between time window and price frame, we can catch sight of some investment opportunity and figure out the potential risk of the stock market in the future. At the end of this thesis, we may keep track of asset allocation which accord with the finite prediction assumption, it points to the active management approach to investment.