what is the efficient markets theory 
the efficient markets theory also known as the efficient markets hypothesis maintains that all the information that is known about a particular stock at a given time is already reflected in its share price or will be in short order for that reason adherents of the theory say it is all but impossible for any investor to consistently outperform the market efficient markets theory is often cited as a major argument for investing through index funds as princeton economist burton c malkiel author of the influential book a random walk down wall street wrote in a 2003 paper many of us economists who believe in efficiency do so because we view markets as amazingly successful devices for reflecting new information rapidly and for the most part accurately 2the bottom linequarterly earnings reports are filings made by public companies every three months to provide data on their latest performance earnings reports are important to stock analysts investors and others as a way of assessing a company s current financial health and its performance over time a disappointing earnings report can have serious consequences for the company s share price and sometimes for the entire market 