Is investment theory, with its notion of market efficiency, the equivalent of a physical law that is universally true? Or is it an irrelevant ivory-tower notion to be disregarded? In the end, it’s a question of balance, and balance comes from applying informed common sense. The key turning point in my investment management career came when I concluded that because the notion of market efficiency has relevance, I should limit my efforts to relatively inefficient markets where hard work and skill would pay off best.
