In every game there’s a fish!

This last point* is very important in terms of what it does and does not mean. Inefficient markets do not necessarily give their participants generous returns. Rather, it’s my view that they provide the raw material— mispricings—that can allow some people to win and others to lose on the basis of differential skill. If prices can be very wrong, that means it’s possible to find bargains or overpay. For every person who gets a good buy in an inefficient  market, someone  else sells too cheap. One of the great sayings about poker is that “in every game there’s a fish. If you’ve played for 45 minutes and  haven’t figured out who the fish is, then it’s you.” The same is certainly true of inefficient market investing.
“What’s It All About, Alpha?” July 11, 2001

*Some investors can consistently outperform others. Because of the existence of (a) significant misvaluations and (b) differences among participants in terms of skill, insight and information access, it is possible for misvaluations to be identified and profited from with regularity.

In every game there’s a fish!