In the middle of the 60's professor Eugene Fama developed the Efficient Market Hypothesis;
Eugene argued that stocks always trade at their fair value- witch means the price contains all the news stories, opinions and expectations for now and for future. This theory making it impossible for investors either trader to purchase undervalued stocks or sell stocks for inflated prices. Because the share price, at any given moment, reflects the full economic value of the company.
When the hypothesis first published, investors thought EMH is conspiracy because perhaps in the same period of time, the fundamental analysis was the common method for most of traders and saying that:
Stock price contains all the news stories, opinions and expectations
eliminates the basics of the faith of fans fundamental analysis. But over the years, more studies have been published witch confirmed the efficient market hypothesis. These studies found a positive correlation between EMH and price action. Naturally, with the strengthening of the technical analysis theory among many traders – the EMH has become more popular.
There's a huge gap between the different theory (technical & fundamental) and as I understand if you want to succeed you have to combine both fundamental and technical analysis. Last two month I invest my all learning the principles of Fundamental analysis so I don't think this theory is wrong, I just think that sometimes this theory doesn't working.
Something made me stop believe that price contains all the information all the time.
No, sometimes it just doesn't work at all. This is a true opportunity as trader or investor to get in and taking a fantastic position. My philosophy combine both technical and fundamental analysis – we're looking for unfair price in very good company and the rest is history 🙂