According to efficient market theory (EMT), markets, you guessed it right, are efficient. That is, the news about favorable and unfavorable developments (we've been getting more of the latter lately) spread so fast that over- and undervalued securities would rectify themselves in price as they would be sold or bought by the investors armed with their newly acquired knowledge. As the popular joke about EMT goes- a professor and a student walk down the street and student sees a $10 bill. Professor says "Don't bother picking it up, for if it was indeed a $10 bill, it wouldn't be there"
But we all know that there are wild swings in the market, they happen all the time. So the markets cannot be efficient, right? The real question is not whether or not the markets are truly efficient or inefficient- it doesn't matter. What matters is whether or not there are EXPLOITABLE inefficiencies in the market allowing us to make money.
So, thinking about the joke above, the question is not whether to pick up a $10 bill, the question is whether walking around looking for scattered $10 bills is the way to make money in the market.