💬 [E8848] Historical academic research found that mutual fund performance in the 1960s averaged below market returns after adjusting for risk and fees, and that 85-90% of annual earnings information was already reflected in prices before public release. Eugene Fama's efficient market hypothesis posits that security prices fully reflect all available information, making consistent outperformance through analysis structurally difficult.

💬 [E8849] The efficient market hypothesis framework, combined with modern portfolio theory and CAPM, established the theoretical foundation for quantitative finance and portfolio construction. Research demonstrated that neither financial analysts nor investment funds as a whole can expect to beat the market, since they collectively constitute the market. This supports passive and systematic allocation approaches over active stock selection.

🟡 [E8850] While the efficient market hypothesis claims security prices fully reflect all available information across three forms (weak, semi-strong, and strong efficiency), the author notes critical assumption risks: fundamental assumptions about rational behavior may not hold in practice, and mathematical models may oversimplify complex market dynamics and behavioral factors. This represents an inherent tension between theoretical market efficiency and real-world regime changes.