The Efficient Market Hypothesis (EMH) was put forward by Professor Eugene Fama of the University of Chicago in the 1970s. This assumption is based on three premises. First, everyone in the market is a rational broker; Second, the stock price reflects the balance between supply and demand of rational people; Third, information about stocks will be quickly digested. For example, the current price of a stock is 50 yuan. From the perspective of efficient market hypothesis, 50 yuan's price reflects the bank's profit prospect, cost estimation and so on, which is the current fair and reasonable price of the stock. If there is new good news in the future, such as asset restructuring, then the price of the stock will rise accordingly until the stock is reasonably valued.

According to the efficient market hypothesis, the market reflects all information, so there is no excess return. For example, if the market goes up 10%, no matter what you do, your income will never exceed 10%. So we can only invest passively, such as buying index funds.

So Buffett said, "If the market is always efficient, I can only beg along the street." But in fact, Buffett and many excellent fund managers have achieved returns that greatly exceed the market. On the one hand, it shows that the market is not always efficient, but it cannot overturn the theory of efficient market hypothesis.

First, although some people have obtained excess returns in the market, statistically speaking, most fund managers can only obtain returns in the same period as the broader market. In other words, Buffett phenomenon may be a survivor bias. There is a reason for this survivor bias, because market participants are not always rational, there is a herd effect and so on.

In short, the efficient market hypothesis is effective in the long run, which is what we usually call "the general trend of the market". Investment cannot go against the general trend, even Buffett will follow the basic laws of the stock market. But judging from the small fluctuations, there is still a lot to be done. If you have enough talent and luck, you can still get excess returns.