In: Finance
Why is it difficult to make excess profits consistently in the efficient capital market?
This is because:
Because of these reasons, there is hardly (or at least theoretically) any potential left for the stock price to grow. A stock price jumps or gives excessive return only when there is lack of information or information asymmetry. When everyone in the market has a full access to the same set of information about a stock, then everyone's assessment of the stock is same. Hence, there are very few instances of excess return or growth. Hence, one can't make excessive growth (return) and that also consistently in the efficient market.