The Less-Efficient Market Hypothesis

This piece argues that stock markets have become less efficient over the past three decades, especially in how they price stocks relative to each other over medium time horizons. It suggests that new technologies, with social media at the forefront, have amplified noise, narratives, and herd behavior in ways that distort prices more than before. For investors and advisors, this shift implies a richer opportunity set for active strategies that can systematically exploit mispricing.

However, any potential return edge comes with higher volatility and deeper performance cycles as markets swing more sharply between extremes. The paper closes by emphasizing the importance of rational, diversified approaches and better behavioral tools to help investors stay committed to these strategies in a noisier market environment.