Food for thought:
“Only recently academia has conceded that markets are inefficient to various degrees. There are numerous causes for these inefficiencies: apart from the fact that investors do not act on a completely rational basis and that information is not available to all participants in the market to the same extent at the same time, a further key cause of market inefficiencies is that the great majority of investors are subject to considerable restrictions on their investment activity. These restrictions are, on the one hand, of a legal nature. On the other hand, however, they are also rooted in the investor’s own investment strategy. The manager’s ability to exploit exactly these inefficiencies and thus create returns that are independent of the traded market’s direction is expressed by the factor ‘alpha’, whereas the ability to achieve (positive as well as negative) returns by simply tracking the markets is defined as ‘beta’.”
While we agree with the author, we disagree that academia has conceded markets are inefficient. Some have, most have not!