An investing strategy is the systematized exploitation of an inefficiency

I've been saying that there are no evergreen investment strategies that will always work. As I said in that essay, having your investment operation in New York, having a Bloomberg terminal, and just being able to do a fundamental or technical screen of stocks were all alpha-delivering advantages once - long ago.

One of the good commenters on the Motley Fool boards gives a great example of this,

"These days I like not to have to travel into the city, and it is nice to be able to pull up a 10k or something at will. Decades ago I was comfortable in the knowledge that there we only two government offices (in the entire country!) that I could go to when I wanted to peruse a company’s recent SEC filings. At least for awhile, my office was conveniently just a couple of blocks away from one; less than a five minute walk.

That proximity was like having super-hero powers. Of course back then you could pay a third-party service to go make a copy of a particular filing you needed and mail it to you, but that wasn’t quite the same as just perusing filings on those little microfiche cards at will. I remember getting the phone message that someone wanted to talk to me about some company or other, I took a walk over to the SEC library and looked through the company’s recent filings, and when I returned the call a half hour later was asked incredulously and somewhat anxiously 'how do you know that!' There were some benefits to general inefficiency for those able to capitalize on it."

Making money is all about finding inefficiencies. Institutional investors aren't able to do anything with small companies, and they aren't able to go to cash, so it's amazing that individual investors and small funds don't take bigger advantage of these two inefficiencies.

An investing strategy is the systematized exploitation of an inefficiency. Keeping your money in munis 80% of the time and switching to stocks during a panic would be a strategy that would outperform but that institutional investors wouldn't be allowed to do.