Describe the "efficient market hypothesis" (EMH).

The efficient market hypothesis (EMH) is fundamentally a theory that postulates financial markets are informationally efficient, meaning that asset prices reflect all available information at any given time. According to this theory, because all relevant information is already incorporated into asset prices, it is impossible for investors to consistently achieve returns that exceed average market returns on a risk-adjusted basis through either technical analysis or fundamental analysis.

What this implies is that since market participants are generally well-informed and react quickly to new information, any new data will be quickly assimilated into prices, leading to a situation where prices are a true reflection of an asset's fundamental value. Therefore, the EMH suggests that it's very difficult to "beat the market" consistently because the available information is already priced in.

This concept can be further divided into three forms: weak, semi-strong, and strong, based on the type of information considered in price formation. Each form varies by the level of information efficiency in the market, but the core idea remains that markets respond swiftly and appropriately to new information, perpetuating the notion of informational efficiency.