Financial markets are not always efficient from "summary" of 23 Things They Don't Tell You About Capitalism by Ha-Joon Chang
Financial markets are often portrayed as efficient mechanisms that quickly incorporate all available information into asset prices. This idea is based on the Efficient Market Hypothesis, which argues that it is impossible to consistently outperform the market because asset prices always reflect all available information. However, this assumption overlooks several important factors that can lead to inefficiencies in financial markets. One key factor is the presence of irrational behavior among market participants. People are not always rational decision-makers and can be influenced by emotions, biases, and cognitive errors. This can lead to the mispricing of assets and opportunities for investors to profit from market inefficiencies. For example, during periods of market euphoria or panic, asset prices can deviate significantly from their intrinsic values, creating opportunities for savvy investors to capitalize on these mispricings. Another factor that can contribute to market inefficiencies...
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