efficient-market hypothesis

…changed understanding of the “efficient market hypothesis,” which held that securities prices in an efficient stock market were inherently unpredictable—that is, an investment in the stock market was, for all but insider traders, equivalent to gambling in a casino. (An efficient stock market was one in which all information…

…to the development of the efficient-market hypothesis and the empirical analysis of asset prices. Fama showed that it is very difficult to predict asset-price movements in the short run, because markets incorporate any new price-relevant information very quickly. This finding came to be known as the efficient-market hypothesis, and it…

…topics in finance is the efficient-market hypothesis, introduced by economist Eugene Fama in a study as part of his 1965 doctoral dissertation. The theory—formalized in a 1970 paper—holds that the financial markets are efficient, meaning no investor can gain an edge by acting on publicly available information.