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What Is the Efficient Market Hypothesis?

By Jeremy Bowman – Updated Sep 14, 2025 at 3:30PM

Key Points

  • Efficient market hypothesis posits stock prices reflect all known info, making market timing tough.
  • Critics argue market sentiment and future predictions also shape stock valuations, not just known info.
  • Adherents of the hypothesis favor index funds, believing any stock outperformance is largely random.
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