What is Efficient Market Hypohthesis

The efficient market hypothesis claims that assets are traded by their fair value on the market and all the information about assets is echoed entirely by their prices. The implication is that gains by smart investment choices on undervalued assets are not possible, and that analyzing price trends to make price predictions is valueless. Despite the theory having some proponents, it has also been met by opposition. The theory has not held true empirically in many instances. For example, there are many investors who make profits off of undervalued assets. One prominent example is Warren Buffet.

Efficient Market Hypohthesis

The efficient market hypothesis is a theory that claims all the information about assets is echoed entirely by their prices.

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