Financial Terms / E - F / Efficient Market Hypothesis

Efficient Market Hypothesis

The Efficient Market Hypothesis is taken from Eugene Fama's research as detailed in his 1970 book, “Efficient Capital Markets: A Review of Theory and Empirical Work.” The theory states that the prices of financial assets reflect all available market information.

A more straightforward way to look at this theory is that it is challenging to consistently and systematically beat the market as all available information about each event that affects the market in some way is immediately incorporated into prices.