The efficient-market hypothesis (EMH) requires that investors have “rational expectations,” that on average the population is correct and whenever new information appears, expectations are updated appropriately.

Nice theory, but in the real world investors are anything but “rational.” As human beings, we tend to overreact to new information, behaving in an irrationally exuberant or irrationally despondent fashion.

The latest example of this irrational behavior has been on full display over the past week. Even before President Obama's announcement of policy changes toward Cuba, investors were scrambling for ways to “play it” (as a side note, I doubt most of these “investors” could quantify how  much the policy changes would actually benefit the companies they were buying, but that is a topic for another day).

Their vehicle of choice quickly became the Herzfeld Caribbean Basin Fund, a closed-end fund with the ticker “CUBA.” Over the past week the fund has more than doubled in a vertical move higher accompanied by a substantial increase in volume.

Now here's where it gets interesting.

While the ticker is “CUBA,” there are no actual Cuban companies in the fund's holdings, only companies that might benefit from a shift in policy towards Cuba. All of the holdings are easily accessible through U.S. shares or ADRs and are traded on the U.S. exchanges.

But it is certainly easier for investors to buy one ticker rather than going through the trouble of replicating the holdings of CUBA. This must be the reason for the huge increased demand for the fund.

Perhaps, but what if I told you that you needed to pay a 70% premium for this easy access. You would probably have a few choice words for me, but that is exactly what investors are doing today as the fund's share price of $14.12 is over 70% higher than the value of its underlying securities at $8.27.