Dynamic Wealth Management: A branch of economic thought known as 'efficient market theory' hypothesizes that the stock market is almost perfectly efficient in the sense that asset values are almost perfectly priced when factoring in all known information. Taking this theory to the extreme would mean that a monkey randomly choosing stocks would do no better or worse on average than a Wall Street guru.
Many people subscribe to this theory. Their main reasoning is that there are so many knowledgeable people that actively invest in stocks (think head fund managers, mutual fund managers, private equity guys, etc.) that all stocks are accurately valued. The only way to make more money in the stock market, or any aasset class for that matter, is to take on more risk. Otherwise, it's futile to attempt to try to pick stocks since you won't find any good deals (other people would have already found them and bid up the stock's price).People who believe in this theory generally just invest in broad, index funds with low expense fees. They attempt to diversify to mitigate risk (hence the appeal of ETFs or index funds) and also attempt to lower transaction costs (again, the appeal of ETFs). By investing in ETFs and index fund, they also can just park their money in the long-run, which will limit their tax liability.
The market does a pretty good job at accurately pricing stocks, and on the whole, most investors probably can't beat a random monkey choosing stocks. But efficient market theory can't explain why some investors consistently beat the market, such as legendary investors like Warren Buffet and George Soros. It is also stretch to think the daily gyrations of the stock market are completely rational.
Experienced fund managers assess estimates of future returns and risk. Their goal is to achieve the highest possible return through the lowest possible risk exposure. This involves teamwork, because no individual can follow all trends and opportunities in the global environment.