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Efficient Markets Theory

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Efficient markets theory (EMT)
Principle that all assets are correctly priced by the market, and that there are no bargains.

Efficient Market Theory
A controversial model on how markets work. It states that the market efficiently deals with all information on a given security and reflects it in the price immediately. The model holds that technical analysis, fundamental analysis, and any speculative investing based on them are useless. The model has three forms: weak efficiency, which holds that technical analysis is ineffective, semi-strong efficiency, which holds that fundamental analysis is ineffective, and strong efficiency, which states that even insider information is immediately reflected in the security prices. Investors and academics disagree on how well the model works.


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However, what new theory would take its place is not clear (it may be that just a minor alteration in the efficient markets theory is needed).
 
 
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