"What does it mean that ""markets work""?"

When we say markets work, we mean they are fair—not omniscient. Market efficiency means that available information is rapidly incorporated into prices through competition among investors. You ca cannot systematically exploit publicly known information for excess returns because others have already acted on it.

But fair doesn't mean perfect. Markets do not predict the future or always get valuations right. We expect errors in market valuations to be symmetrical—sometimes prices are too high, sometimes too low, but in unpredictable ways. You can't consistently identify and exploit these mispricings because they are random.

The key insight: beating the market through stock picking or market timing is extraordinarily difficult—not because markets are clairvoyant, but because they're competitive and efficient at processing available information.