Market Efficiency

“One of the most powerful sources of mispricing is the tendency to over-weight or over-emphasize current conditions.”

“I believe the market accurately reflects not the truth, which is what the efficient market hypothesis says, but it accurately and efficiently reflects everybody’s opinion as to what’s true.”

“When investors — individual and institutional alike — engage in far more trading –inevitably with one another — than is necessary for market efficiency and ample liquidity, they become, collectively, their own worst enemies.”

“I’ve often said that the efficient market hypothesis, or EMH, has a lot of truth to it, but the CMH — or “cost matters hypothesis” — is eternally truthful to the last penny.”

“Inefficiency doesn’t make it easier for all investors to beat the market.”

“People have always made money by taking advantage of inefficient markets.”

“Market inefficiencies, like tax selling and window dressing, also create mindless selling, as can the deletion of a stock from an index. These causes of mispricing are deep-rooted in human behavior and market structure, unlikely to be extinguished anytime soon.”

“Stock market efficiency is an elegant hypothesis that bears quite limited resemblance to the real world.”