Summary of Efficiently Inefficient

Looking for the book?
We have the summary! Get the key insights in just 10 minutes.

Efficiently Inefficient book summary
Start getting smarter:
or see our plans


8 Overall

8 Applicability

7 Innovation

8 Style


The efficient market theory posits that making money by trying to outperform the stock market is impossible since prices instantaneously reflect all available information. But asset manager and finance professor Lasse Heje Pedersen asserts that the reality of trading is somewhat different. Profits are available to those brave enough to take the risks and pay the costs, he says, but knowing which opportunities can make money for you and which fees you should absorb is the hard part of investing. In this advanced resource book on the financial markets, Pedersen outperforms the classics by grounding the strategies of successful portfolio managers in academic theory. He offers clear explanations, notably, about the role of hedge funds. While never giving investment advice, getAbstract can nonetheless issue a clear buy recommendation on this comprehensive, valuable textbook to financial professionals, investors and students of finance.

In this summary, you will learn

  • How “efficiently inefficient” markets function,
  • What main trading strategies hedge funds employ and
  • How these funds form and manage their portfolios. 

About the Author

Lasse Heje Pedersen is a principal at AQR Capital Management and a professor of finance at Copenhagen Business School and New York University Stern School of Business. He received the Bernácer Prize as the best European Union economist under the age of 40, and he is the co-author of Market Liquidity: Asset Pricing, Risk and Crises



The Investment Marketplace

Many economists hold the longstanding belief that markets are efficient and that market prices will always reflect all available information. Yet many investors make money by using strategies that outperform the market. One suggested explanation for this anomaly is that human emotions create errors in prices, opening opportunities for profit. This interpretation suggests the possibility of many ways “to beat the market,” since humans are volatile and make a lot of mistakes. However, competitive investors in the process of trying to beat the market actually push it toward efficiency – without ever getting it completely there. Thus, rewards are available because “markets are inefficient but to an efficient extent.”

Get the key points from this book in 10 minutes.

For you

Find the right subscription plan for you.

For your company

We help you build a culture of continuous learning.

 or log in

Comment on this summary

More on this topic

Customers who read this summary also read

More by category