It is widely held that financial asset markets always fully reflect all available and relevant information, and that adjustment to new information is virtually instantaneous.
Asset prices respond only to the unexpected part of any news, since the expected part of the news is already embedded in prices.
According to the EMH, by using available information, all market participants arrive at forecasts of future security returns, with these forecasts fully reflected in the prices that are observed in financial markets.
Changes in asset prices occur on account of news which cannot be predicted in any systematic manner.
This way of thinking is also known as the Efficient Market Hypothesis (EMH), and is closely linked with the Rational Expectations Hypothesis (REH), which postulates that market participants are at least as good at price forecasting as is any model that a financial market scholar can come up with, given the available information.
The view that market participants are just as good at forecasting as any model implies that their forecasts do not display systematic biases—their forecasts are right on average.
Are Profits Random Phenomena?
https://mises.org/mises-wire/do-financial-markets-immediately-provide-all-relevant-information
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