Market Inefficiency

Market inefficiency occurs when financial markets do not accurately reflect all available information, leading to mispriced assets. This means that some investments may be undervalued or overvalued, and prices don't always represent the true value of a security. Factors contributing to inefficiency include limited information, rapid changes, behavioral biases, or external influences. While markets tend to be efficient over the long term, inefficiencies create opportunities for investors to gain profits by identifying these discrepancies. Essentially, market inefficiency indicates that prices do not always perfectly reflect the fundamental value of assets at a given moment.