Klarman: Academic Efficient Market Theories Break Down in Real-World Trading
Seth Klarman · Seth Klarman – Timeless Value Investing (EP.328) · Jul 17, 2023 · at 16:28
Seth Klarman, CEO of The Baupost Group, contrasts academic theories of market efficiency with his early hands-on experience trading securities at Mutual Shares.
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“The academic idea was logical that there are transaction costs, and there are a lot of competitors, and even when there aren't that many, even one competitor can reprice a mispricing. But had they chosen instead to sit down at the trading desk of mutual shares, they might have seen what really inefficient markets look like and realize that what's true in theory isn't true in practice in every case.”
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