Evidence that a mutual fund has performed extraordinarily well in the past contradicts the efficient market hypothesis.

Question

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The efficient market hypothesis (EMH) suggests that all available information is already reflected in stock prices, making it impossible to consistently achieve higher returns than the overall market through stock selection or market timing. However, the EMH does not claim that outperformance is impossible due to luck, specific skills, or private information. Past performance of a mutual fund, even if extraordinary, does not necessarily contradict the EMH, as it could be due to chance or factors not related to market inefficiency.

Evidence That a Mutual Fund Has Performed Extraordinarily Well in the Past