What Is Market Efficiency?

Topics:
Investment Strategy
Tags:
Finance,
Financial Accounting,
Investment,
Investopedia,
Return,
Stock
Source:
Investopedia

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Overview: When money is put into the stock market, it is done with the aim of generating a return on the capital invested. Many investors try not only to make a profitable return but also to outperform, or "Beat," the market. However, market efficiency - detailed in the Efficient Market Hypothesis (EMH), formulated by Eugene Fama in 1970 - suggests that, at any given time, prices fully reflect all available information on a particular stock and/or market. Thus, according to the EMH, no investor has an advantage in predicting a return on a stock price since no one has access to information not already available to everyone else.

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