Market Inefficiency Quotes

The prevailing wisdom is that markets are always right. I take the opposition position. I assume that markets are always wrong… most of the time the trend prevails; only occasionally are the errors corrected. It is only on those occasions that one should go against the trend. This line of reasoning leads me to look for the flaw in every investment thesis. ... I am ahead of the curve. I watch out for telltale signs that a trend may be exhausted. Then I disengage from the herd and look for a different investment thesis. Or, if I think the trend has been carried to excess, I may probe going against it.

Markets are smart and governments are dumb.

My citizen activism is a direct outgrowth of a classical and fiscally conservative training in economics at Harvard. It is a perspective rooted in one of the most important concepts in economics - the need for government intervention in the presence of a market failure.

To us, investing is the equivalent of going out and betting against the pari-mutuel system. We look for a horse with one chance in two of winning, and that pays three to one. In other words, we're looking for a mispriced gamble. That's what investing is, and you have to know enough to know whether the gamble is mispriced.

I put forward a pretty general theory that financial markets are intrinsically unstable. That we really have a false picture when we think about markets tending towards equilibrium.

Every once in a while, the market does something so stupid it takes your breath away

Market prices are always wrong.

The market is incredibly inefficient and capable on rare occasions of being utterly dysfunctional. And people have a really hard time getting their brain around that fact. They want to believe that it's approximately efficient almost all the time, and it simply isn't true.

Our global economy is out of control and performing contrary to basic principles of market economics.

Financial markets need to become less, not more, efficient.

Subsidies should never be a permanent feature of any market. They should be introduced only to address market failure and they should be withdrawn gradually as those distortions in the market are addressed.

The reality is that financial markets are self-destabilizing; occasionally they tend toward disequilibrium, not equilibrium.

We are not smart enough to leave things to the market.

The generally accepted view is that markets are always right -- that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite view. I believe the market prices are always wrong in the sense that they present a biased view of the future.

When the private sector fails, the solution is more government. When the government fails, the solution is more government.

Unfettered markets eventually get out of whack.

Markets are frequently ahead of, and often out of sync with, the economy.

The time to go into a new business is when it’s badly run by others.

… in May, 1917, wheat was selling in Chicago at $3.25 a bushel and the consumer was paying for his bread on that basis, although the official estimate of the Department of Agriculture of the average price actually received by the farmer for his crop was but $1.44 a bushel.

Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.

The prevailing wisdom is that markets are always right. I take the opposite position. I assume that markets are always wrong.

I don't entirely reject the idea of efficient markets. It needs updating.

Reformers will better rectify any inadequacies they detect in the market by reaping the profits available from that inadequacy than by denouncing the very system which makes meaningful reform possible.

Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity - or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories.