Most of my blog posts are going to simply be me linking to really interesting things I read on the web. Here's first, from Portfolio Magazine.
It's a profile piece about a stock broker who realized that his entire profession is a giant exercise in peddling bullshit. Basically, his job was to take people's money and make them feel good about it.
What, at least to me, is more interesting is the idea behind why stockbrokers are full of shit - the efficient market hypothesis. Basically, you can't beat the market. Nobody can. If you could, so could everyone else, in which case they would. But everybody can't beat the market... because everybody IS the market. So therefore nobody can beat the market. Pretty slick, eh?
UPDATE: It seems my favorite blogger, Megan McArdle, took note of the article - several times!
Monday, December 10, 2007
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1 comments:
Okay, maybe I'm just not all that intelligent, but I never understood the "can't beat the market" thing. You can and people do! And I'd say that even with an efficient market, not everyone can beat the market. It depends on how much information you're willing to obtain to make your decisions on when to buy and sell. It seems to me that if you're going to spend every hour of every day researching companies, you'll beat the people who act on a "hot tip" almost every time.
I think it's more like a grade curve. Sure, the information's there for everyone, and in principle, everyone could do equally well, but it's the people who do their homework who consistently end up on the upper side of the curve.
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