The Efficient Markets Hypothesis

The term efficient markets was coined by Eugene Fama at the University of Chicago in a 1969 article. The idea has some attractiveness to it, because you're playing against everybody else who's trying to do the same thing. Even the smart money so-called only know about certain corners and nooks in the market. But the group of them as a whole who don't talk to each other very much, set prices. And they set them at their optimal level better than anyone could get. So if you want to forecast, this brings us to the random walk hypothesis. If you want to, the market price looks random from day to day. But it's actually very smart.