Markets are Efficient
When we say that markets are efficient, we mean that stock prices accurately reflect the knowledge and expectations of all investors, and that markets assemble and evaluate information so effectively that the price of a stock is usually our best estimate of its intrinsic value. Though prices are not always correct or perfect, markets are so competitive that it is unlikely any single investor can routinely profit at the expense of all other investors.
Said another way by Eugene F. Fama, “Prices are not always perfect, nor is that a condition of market efficiency. The only condition efficient markets require is that a disproportionate number of market participants do not consistently profit over other participants. Since ‘mispricings’ tend to occur in both directions and managers over- and underperform with random frequency when adjusted for risk and cost, markets seem to be efficient.”