1.0 Introduction The theory of efficient market hypotheses is a well-known theory in real life. This theory was proposed by Eugene Fama in 1960. He suggested that a market is considered efficient when the price of a security quickly and fully reflects all available information. This means that a company's share price reflects the company's performance. The higher the performance of that particular company, the higher the price of a stock. Likewise, the price of shares belonging to Dutchlady reportedly causes the purchase cost to be at a higher price and gives higher returns each year. The reason behind this scenario is simple. As long as humans continue to consume Dutchlady's dairy products, demand will continue to increase. Therefore, Dutchlady is able to maintain its production successfully to this day. And they have the right to price the stock at a higher price as they perform well in their business. Coming back to reality, even if the stock price reflects all the information, it is still impossible for investors to outperform the market. No one manages to earn extra profits from stock trading activities when the market is efficient. However, there are numerous factors that influence market efficiency. The factors are the number of market participants, the availability of information, limits to trading (arbitrage), transaction costs and information costs. The broad term of market efficiency can be classified into three forms of market efficiency: weak form, semi-strong form and strong form. These three different forms of market efficiency were retrieved from one of Fama's famous articles titled “Efficient Capital Markets: A Review of Theory and Empirical Work”, conducted by Eugene Fama in 1970. In a weak-form efficient market, the r ... ... half of the paper ... from the field of psychology that people tend to make systematic cognitive errors when forming expectations. One such fallacy that could explain stock price overreaction is the representational heuristic, which holds that individuals attempt to identify trends even where there are none, and that this can lead to the mistaken belief that future patterns will resemble those of the recent past. On the other hand, the momentum in stock returns can be explained by anchoring, or the tendency to overweight initial beliefs and underweight the relevance of new information. It follows that momentum observed at intermediate horizons could be extrapolated to longer time horizons until an overreaction develops. This, however, does not imply any easily exploitable trading strategy, because the point at which momentum stops and overreaction begins will never be apparent until after the fact..