Market Inefficiencies Quotes

Of all the mysteries of the stock exchange there is none so impenetrable as why there should be a buyer for everyone who seeks to sell.

Those who believe that health is a commodity, on par with cars or computers, fail to grasp the basic economic lesson that health is very vulnerable to exposure to the markets, not least due to the profound asymmetries in power between the providers and consumers.

Arbitrage human nature. It's not going to change any time soon.

You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map - way off the map. You may find local companies that have nothing wrong with them at all. A company that I found, Western Insurance Securities, was trading for $3/share when it was earning $20/share!! I tried to buy up as much of it as possible. No one will tell you about these businesses. You have to find them.

I used to think that good short-sellers could be trained like long-focused value investors because it should be the same skill set; you’re tearing into the numbers, you’re valuing the businesses, you’re assigning a consolidated value, and hopefully you’re seeing something the market doesn’t see.But now I’ve learned that there’s a big difference between a long-focused value investor and a good short-seller. That difference is psychological and I think it falls into the realm of behavioral finance.

No matter how skillful the trading scheme, over the long haul, abnormal returns are sustained only through abnormal exposure to risk.

They [free market policies] were never based on solid empirical and theoretical foundations, and even as many of these policies were being pushed, academic economists were explaining the limitations of markets for instance, whenever information is imperfect, which is to say always.

The stock market resembles a huge laundry in which institutions take in large blocks of each others washing ... without rhyme or reason.

This decade is strewn with examples of bright people who thought they built a better mousetrap that could consistently extract abnormal returns from the financial markets. Some succeed for a time. But while there may occasionally be mis-configurations among market prices that allow abnormal returns, they do not persist.

Properties have different characteristics, like companies, and the market throws up more opportunities because it is inefficient.

Markets have built in inefficiencies, serious inefficiencies which are well known.

I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions.

I gradually became persuaded that the subjects, without intending to, had revealed to me a basic truth about markets that was foreign to the literature of economics.

The entire pursuit of value investing requires you to see where the crowd is wrong so that you can profit from their misperceptions.

Isn't it interesting that markets are not just perfect? In business school and economic theory, you learn all about those perfect markets, and there's no such thing as a perfect market.

While the apostles of the new so-called "behavioral" theory present ample evidence of how often human beings make irrational financial decisions, it remains to be seen whether these decisions lead to predictable errors that create systematic mispricings upon which rational investors can readily and economically capitalize.

Worker ownership within a state capitalist, semi-market system is better than private ownership but it has inherent problems. Markets have well-known inherent inefficiencies. They're very destructive.

It would clearly not be an improvement to build all houses exactly alike in order to create a perfect market for houses, and the same is true of most other fields where differences between the individual products prevent competition from ever being perfect.

Undervaluations caused by neglect or prejudice may persist for an inconveniently long time, and the same applies to inflated prices caused by over-enthusiasm or artificial stimulants.

People really don't like to hear success explained away as luck — especially successful people. As they age, and succeed, people feel their success was somehow inevitable. They don't want to acknowledge the role played by accident in their lives. There is a reason for this: the world does not want to acknowledge it either. If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on. But it has a broader and less practical message: don't be deceived by life's outcomes. Life's outcomes, while not entirely random, have a huge amount of luck baked into them. Above all, recognize that if you have had success, you have also had luck — and with luck comes obligation.

The grim irony of investing is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for.