Your friend, John, believes that since capital markets are efficient,

Your friend, John, believes that since capital markets are efficient, he doesn’t need to read the financial press or
be involved in stock research before purchasing stocks for his portfolio.

He simply throws darts at the stock
pages and buys the stocks the darts hit. Is stock research and analysis important when buying and selling stocks
in an efficient market?

ANSWER

Yes! Efficient capital markets theory suggests that investors will not be able to outperform the market in the long-run
using just publicly available information. This is due to the fact that market prices very quickly adjust to information. If
an investor only knows what all other investors know, then he or she cannot use that information to earn abnormal
returns. However, an uninformed investor can certainly underperform the market.