Exploring Market Anomalies in Active Equity Investing

Market anomalies refer to patterns in stock prices that deviate from the efficient market hypothesis (EMH), indicating potential opportunities for active equity investors. Examples of these anomalies include the January effect, the size effect, and value versus growth stock performance.

In this essay, discuss two specific market anomalies and how an active equity investor might seek to exploit them. Provide examples illustrating the implications of these anomalies and the potential risks associated with active investing in the presence of such market inefficiencies.