The markets are generally efficient at pricing securities. So, in that way, I do agree with the general notion of the efficient market theory. What we exploit, and how we invest is to find pockets of market inefficiency, and to exploit the differences between price and intrinsic value.

1. Imperfect information

The more coverage a stock receives, the harder it is to find divergences in intrinsic value based on traditional forms of valuation. They exist sporadically and infrequently. One must remember to take stock of their own abilities as an investor. People who work in the financial industry are generally smart and highly motivated. It is extremely hard to possess an informational edge on companies that are widely covered since so many people are working on the same problem as you are. Is it possible to generate superior insight by the careful study of annual reports and financial data? ......