The efficient market hypothesis
Consultant Andrew Strickland considers market oddities, such as the Chipotle paradox, that challenge the effcient market hypothesis.
In financial economics, the efficient-market hypothesis states that asset prices fully reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis, since market prices should only react to new information or changes in discount rates.
The hypothesis was developed by Professor Eugene Fama, one of the true “greats” of financial markets analysis. Fama argues for the purest form of the hypothesis: namely, that shares trade at their fair value, making it impossible for investors to either purchase undervalued shares or sell shares for inflated prices.
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