You only need to make one big score in finance to be a hero forever.
What counts is what you do with your money, not where it came from.
To beat the market you'll have to invest serious bucks to dig up information no one else has yet.
Everyone recognizes that's a joke because obviously the number and shape of the pieces doesn't affect the size of the pizza. And similarly, the stocks, bonds, warrants, etc., issued don't affect the aggregate value of the firm.
Most people might just as well buy a share of the whole market, which pools all the information, than delude themselves into thinking they know something the market doesn't.
So everybody has some information. The function of the markets is to aggregate that information, evaluate it, and get it incorporated into prices.
I should mention that I am a member of the board of directors of Dimensional Fund Advisors.
Another is, if you take money out of your left pocket and put it in your right pocket, you're no richer.
But in practice, if often comes down to not suffering a loss as big as the huge gain you made a while ago.
My expertise was in public finance, particularly corporate taxation, since I had worked at the US Treasury.
As an economics undergraduate, I also worked on a part-time basis in Cambridge, Massachusetts, for a company that was advising customers about portfolio decisions, writing reports.
I can't speak for them, of course, but I believe that most economists would accept the view that, while you sometimes can make a score by sheer luck, you can't do it constantly, unless you're willing to put the resources in.
Of course. I favor passive investing for most investors, because markets are amazingly successful devices for incorporating information into stock prices.
Junk bonds prove there's nothing magical in a Aaa bond rating.
Arbitrage proof has since been widely used throughout finance and economics.
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