Buffett concluded that there has to be inefficiency in the market for all these investors, all independently investing with the same method, to be able to exploit gaps between price and value. “When the price of a stock,” he declared, “can be influenced by a ‘herd’ on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical.”
