Ativo Capital

Rigorous Thinking

Financial and economic commentary reflecting Ativo’s world view:

“Sometimes Markets Are Stupid”

Thursday, December 18, 2014


Writing at Bloomberg View, Noah Smith puts his description of yet another market inefficiency in the proper perspective: “Of course, experienced traders are laughing as they read this, because it’s obvious to anyone who has ever traded.” Even so, we appreciate his contribution.

We at Ativo also believe in long-run market efficiency, but efficiency doesn’t happen automatically. Efficient markets require active managers to systematically search out and correct the countless inefficiencies that continually crop up. So when an active investor beats the benchmark (on a risk-adjusted basis, of course), just think of it as compensation for keeping markets efficient.