Weak/semi-strong/strong form

Hi guys

Maybe I’m gong crazy but I can’t get my head around contradictions to these forms of market efficiency. In the CFA1 Mock, afternoon session, Q90 it says the following:

"An observation that stocks with above average price-to-earnings ratios have consistently underperformed those with below average price-to-earnings ratios least likely contradicts which form of the market efficiency?

Answer is B, strong form, with the explanation that it’s a contradiction of the weak form and the semi-strong form because all the information used to categorize stocks by their price-to-earnings ratios is pubicly available.

Yep, but strong form includes publicly-available information too and captures everything in semi-strong and weak forms so how is it that this is least likely to contradict the strong form?

Someone please provide me the “d’uh” answer I’m looking for here… I thought I was nailing this stuff but clearly peaked too soon!

think of it this way… in a strong-form market efficient system -valuation metrics ALWAYS work… the point is that even in a theoretical strong form market… the equilibrium price is still constantly moving. - that means some stocks will appreciate and some will depreciate according to operations and actual results. low p/e stocks WILL ALWAYS outperform high p/e stocks. in a strong-form market.

in the real world … it doesnt

Thanks for the explanation - one more box checked!

Great explination!!!