Modern finance · 1950s–1990s
1965
Efficient markets
Eugene Fama argues prices already reflect what's known.
In the mid-1960s Eugene Fama argued that competition among investors makes prices reflect available information, so beating the market consistently is very hard.
💡 Why it made sense then
Studies kept finding that professional managers rarely beat the market after costs.
Ideas it gave us
- 🏗️ Efficient market hypothesis
The efficient market hypothesis says stock prices already reflect all available information, so no one can consistently beat the market except by luck or by taking more risk.
Practise with $10,000 in play money
Free. No real money involved.