Market inefficiencies can be exploited by contrarian investors from "summary" of Contrarian Investment Strategies in the Next Generation by David Dreman
Contrarian investors have a unique advantage in the market due to their ability to exploit inefficiencies that arise from the herd mentality of most investors. When the majority of market participants are overly optimistic or pessimistic about a particular stock or sector, contrarians can take advantage of the resulting mispricing to buy low and sell high. One common market inefficiency that contrarian investors can exploit is the tendency of investors to overreact to short-term news and events. This can lead to significant price swings in stocks that are not necessarily justified by the underlying fundamentals of the company. Contrarians can capitalize on these price fluctuations by taking a longer-term view and buying undervalued stocks that have been unfairly punished by the market in the short term. Another market inefficiency that contrarian investors can expl...
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