Who Is On the Other Side? A Framework for Understanding Market (In)Efficiency

Januar 21, 2026

Who Is On the Other Side? A Framework for Understanding Market (In)Efficiency

Consilient Observer

Who Is On the Other Side? A Framework for Understanding Market (In)Efficiency

Januar 21, 2026

We explain the factors that determine market efficiency and offer a taxonomy of the sources of inefficiency.
Markets cannot be fully informationally efficient because there is a cost to gather information and reflect it in asset prices.
We review how markets have changed, including flows from active to passive funds, more short-term focus within active, and the rise of retail.
The main goal of this report is to encourage active investors to ask and formulate an informed answer to the question of “Who is on the other side?”
We categorize market inefficiencies into four areas: behavioral, analytical, informational, and technical.

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Das Counterpoint Global Team ist bestrebt, langfristige Investitionen in einzigartige Unternehmen zu tätigen, deren Marktwert aus fundamentalen Gründen deutlich steigen kann. Ihre Portfolios sind in der Regel konzentriert und unterscheiden sich von ihren Benchmarks. Das Team besteht aus 26 Personen, darunter 16 Investment-Profis und zwei Disruptive Change-Forscher. Die Kultur des Teams fördert Zusammenarbeit, Kreativität, eine kontinuierliche Entwicklung und differenziertes Denken.

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DEFINITIONS

Return On Invested Capital (ROIC) represents the rate of return a company makes on the cash it invests in its business.

The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

IMPORTANT INFORMATION

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

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