In an efficient market, deviations above and below fair value are possible, but these deviations are considered to be random. Over the long run, the price should accurately reflect fair value. The hypothesis further asserts that if markets are efficient, then it should be virtually impossible to outperform the market on a sustained basis. Even though deviations will occur and there will be periods when securities are over- or undervalued, these anomalies will disappear as quickly as they appeared, thus making it almost impossible to profit from them. From experience, most of us would agree that the market is not perfectly efficient.
Anomalies do exist and there are investors and traders that outperform the market.
Therefore, there are varying degrees of market efficiency, which have been broken down into three levels. These three levels also happen to correspond to the beliefs of the fundamentalists, technicians and random walkers. Because all possible information is already reflected in the price, investors and traders will not be able to find or exploit inefficiencies based on fundamental information. Generally, pure technical analysts believe that the markets are strong-form efficient and all information is reflected in the price. The semi-strong form of market efficiency theorizes that the current price reflects all readily available information.