Anavex Life Sciences Corp (AVXL)

[Gator328]

Suppose you’re the CEO of a company and agreed to sell X number of shares on a certain day in the future. In this scenario, you’ve got a temporary price imbalance and the market is not correct.

Suppose there are allegations of fraud and hedge funds are required to sell their entire positions at once to avoid being sued by their investors. The fire sale price does not reflect the fair market value.

There are lots of instances where two parties agree to a transaction, and one side gets it wrong completely. Astute investors have made billions on arbitrage situations precisely because the market is wrong.

You are correct though that over the long-the long-term, the market is always correct. A day’s snapshot though often paints an incomplete picture, the same way a baseball player who goes 4-for-4 in a game isn’t a 1.000 hitter, despite what the box score says.