The Efficient Market Hypothesis

The Efficient Market Hypothesis (EMH) suggests that financial markets quickly incorporate all available information into asset prices. As a result, stock prices always reflect an investor’s best estimate of a company's true value, making it impossible to consistently outperform the market through expert analysis or timing. In essence, markets are "efficient" at processing known information, so only new, unpredictable news can shift prices. While some investors may outperform temporarily, EMH argues that, on average, trying to beat the market isn't typically successful over the long term.