What does the efficient market hypothesis suggest?

The efficient market hypothesis (EMH) suggests that asset prices reflect all available information, which means that it's impossible to consistently achieve higher returns than the overall market through expert stock selection or market timing. This hypothesis is grounded in the idea that information is rapidly incorporated into asset prices, making it challenging for investors to find undervalued or overvalued assets.

When information becomes public, whether it’s related to a company's earnings, a new product launch, or macroeconomic conditions, the market adjusts prices almost instantly to reflect that knowledge. As a result, in an efficient market, attempting to outperform the market consistently is difficult and can often lead to subpar investment performance.

The other options are less aligned with the core principles of the efficient market hypothesis. For example, while markets can experience volatility, this is not a fundamental premise of EMH. Nor does the hypothesis claim that information is rarely available to investors; rather, it states that once information is available, it is quickly reflected in prices. Finally, predicting prices with certainty is contrary to the EMH, as it acknowledges the inherent uncertainty and randomness in market movements.