Clarification on semi-strong EMH tests (BKM Chap 11)

So, semi-strong efficient market hypothesis basically states that all publicly available fundamental(whatever "fundamental" means) information about a company is all ready included in the price of a stock. Things like past stock performance, business strategy, management shifts, etc... are included in semi-strong EMH hypothesis.



However, there are some counter points, and I was hoping someone else could confirm my understanding of them.



There is the small firm in January effect. The study manual goes on to say that small firms have historically generated superior returns, particularly in January



There is also the Book to Market Ratios which is to say that high book to market ratio firms typically outperform the rest of the market.



Is the idea, that neither small firms or high book to market ratio stocks should not earn greater returns, because the rest of the market knows they are small or high book to market stocks, should know they have better returns, and should respond by purchasing more of these stocks, driving up the price, and reducing the return to a market consistent level?



Is that the idea here?



Thanks!



Gareth Keenan

Clarification on semi-strong EMH tests (BKM Chap 11)