Warren Buffett once said, “Stocks often trade at foolish prices, both high and low. Efficient markets exist only in textbooks.”

And he couldn’t be more right.

Textbooks will tell you that markets are efficient.

That all information is priced in.

That prices reflect true value.

That it’s impossible to beat the market.

But then reality steps in.

And it reminds us that markets are made up of people.

Emotional, imperfect, impulsive people.
And when people get scared, greedy, or euphoric, they make irrational decisions.

Just look around.

One day, a company announces record profits and its stock tanks.

Another day, a loss-making business makes vague promises about AI and the stock soars.

Sometimes, the most valuable businesses trade at bargain prices.
And other times, mediocre companies get absurd valuations.

This isn’t efficiency.
This is emotion.

This is human behavior playing out in real time on trading screens, in WhatsApp groups, and on financial news channels.

So what does this mean for you, the investor?

It means you can’t rely on the market to tell you what something is worth.

You can’t assume today’s price is fair.
You must learn to separate price from value.

Because the two are often worlds apart.

When the market gets irrational, either too optimistic or too fearful, it creates opportunities.

For those who are calm.
For those who are disciplined.
For those who understand that volatility is not a bug in the system, it’s the feature that makes long-term wealth creation possible.

So the next time you hear that markets are efficient, pause.

Look deeper.

Because the truth is: markets are efficient in the long run, but wildly irrational in the short term.

And if you can hold your nerve while others are losing theirs…

That’s where the real edge lies.

Not in chasing hot tips.
But in staying wise when others act foolish.