Markets are efficient in the sense that a major company announcement or macroeconomic event will instantly affect the price of a stock. One cannot profit from this news once it is published because the outcome, whether positive or negative, is instantly embedded in the headline. However, the efficient markets hypothesis loses its force when it is understood that someone can generate alpha by predicting a significant change in a business or macroeconomic event and determining in which direction it will move the title. To profit from the markets, a stock analyst must be able to predict these critical events and determine how they will move stocks. Markets can be exploited when they act by consensus. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get Original Essay Given this position, I would allocate capital to companies that I believe have a high chance of being acquired in the future. I would buy shares of many mid-sized companies that I believe could benefit from M&A within my investment horizon. To hedge the risk of not acquiring these companies, I would diversify my portfolio into several sectors that I believe will be successful over my investment horizon. If I were to implement this strategy right now, I would invest in mid-sized companies with M&A potential in the consumer discretionary, energy, and technology sectors. This would expose the inefficiency of markets by taking advantage of major events that have not yet occurred and would most likely increase the stock price. I consider Weight Watchers (WTW) a strong buy due to increasing consumer confidence, technology, and technical indicators. . On June 18, Weight Watchers reached an all-time high of $105.73. Since then, the stock has fallen to around $69 due to a second-quarter report announcing a decline in subscribers. However, second-quarter earnings and revenue beat expectations and full-year guidance rose. I view the 34% drop in the stock price since the June 18 high as an overreaction that opens up a great opportunity for anyone who is bullish on Weight Watchers. Consumer confidence is at an 18-year high, which means they can splurge. discretionary goods. The American consumer has the freedom to treat themselves by subscribing to Weight Watchers instead of worrying about daily necessities. Periods of strong consumer confidence are most often when health and fitness stocks do best. So far in 2018, the health and fitness sector has exploded as stocks like Medifast, Herbalife Nutrition, Planet Fitness, and obviously Weight Watchers have all significantly outperformed the S&P 500. Weight Watchers represents an opportunity to invest in the health and fitness sector at an affordable price. undervalued price due to overreaction to declining subscriber numbers. Another reason Weight Watchers has so much room to grow is its commitment to integrating technology into its approach to getting fit. Weight Watchers uses trackers on Apple Watch and Fitbit to reward members with points that help them measure their progress. By using this points system, Weight Watchers is able to create a user base that is much easier to retain because they. $120.