Efficient market hypothesis
The efficient market hypothesis (EMH) holds that share prices already reflect available information, so investors cannot consistently beat the market by trading on it. It has weak, semi-strong and strong forms.
See it move
The efficient market hypothesis has three forms. Weak form: price reflects past price and volume data, so charting cannot give an edge. Semi-strong form: price reflects all public information, including financial statements — a €50 share re-rates to about €54.50 on a 9% profit surprise almost immediately. Strong form: even private, insider information is already priced in.
Check yourself
An investor studies ten years of a share's historical price and trading-volume charts and trades on the patterns found there, but earns risk-adjusted returns no better than a simple buy-and-hold strategy after costs. This outcome is most directly consistent with which form of market efficiency?