All > Business > Finance > Personal Finance
Proponents of the efficient market theory believe that a stock's current price accurately reflects what investors know about the stock.
They also maintain that you can't predict a stock's future price based on its past performance. Their conclusion, which is contested by other experts, is that it's not possible for an individual or institutional investor to outperform the market as a whole.
Index funds, which are designed to match, rather than beat, the performance of a particular market segment, are in part an outgrowth of efficient market theory.
- Browse Related Terms: Average, Breakout, Dogs of the Dow, Dow Jones 65 Composite Average, Dow Jones Industrial Average (DJIA), Dow Jones Transportation Average, Dow Jones Utility Average, Dow theory, Efficient market theory, Logarithmic scale, NASDAQ Composite Index, New York Stock Exchange Composite Index, Qubes, Value Line Composite Index, volume, Weighted stock index