With information now ubiquitous, the primary source of market inefficiency is no longer informational but behavioral. The most durable edge is "time arbitrage"—exploiting the market's obsession with short-term results by focusing on a business's normalized potential over a two-to-four-year horizon.

Contrary to conventional wisdom, the massive flow of capital into passive indexes and short-term systematic strategies has reduced the number of actors focused on long-term fundamentals. This creates price dislocations and volatility, offering alpha for patient investors.

Daniel Gladys argues that as passive investing grows, fewer participants focus on fundamentals. This widens the gap between a stock's price and its intrinsic value, creating a favorable environment for disciplined value investors who can identify these overlooked opportunities.

Contrary to popular belief, the market may be getting less efficient. The dominance of indexing, quant funds, and multi-manager pods—all with short time horizons—creates dislocations. This leaves opportunities for long-term investors to buy valuable assets that are neglected because their path to value creation is uncertain.

Despite widespread sentiment that China was uninvestable, the country became one of the world's best-performing markets. This demonstrates how a powerful negative narrative can create significant opportunity for contrarian investors who focus on fundamentals, as the cheapest quintile of Chinese stocks remains attractive.

An estimated 80-90% of institutional trading is driven by quant funds and multi-manager platforms with one-to-three-month incentive cycles. This structure forces a short-term view, creating massive earnings volatility. This presents a structural advantage for long-term investors who can underwrite through the noise and exploit the resulting mispricings caused by career-risk-averse managers.

Today's markets are less efficient because the dominant players—passive funds, retail traders, and short-term quants—do not invest based on long-term fundamentals. This creates a significant arbitrage opportunity for investors who are willing to focus on a company's intrinsic value over a one- to three-year horizon, a timeframe now largely ignored.

The modern market is driven by short-term incentives, with hedge funds and pod shops trading based on quarterly estimates. This creates volatility and mispricing. An investor who can withstand short-term underperformance and maintain a multi-year view can exploit these structural inefficiencies.

The most important market shift isn't passive investing; it's the rise of retail traders using low-cost platforms and short-term options. This creates powerful feedback loops as market makers hedge their positions, leading to massive, fundamentals-defying stock swings of 20% or more in a single day.