[ExI] Sudden outbreak of democracy baffles US pundits

Stathis Papaioannou stathisp at gmail.com
Tue Oct 7 12:59:55 UTC 2008

2008/10/7 The Avantguardian <avantguardian2020 at yahoo.com>:

> I just wanted to clarify that I am not suggesting one buy just *any* stock. Think about companies that produce goods or services that you think that even broke people will need, check their balance sheets, and ask yourself if you trust their management team. The first rule of any market place is "buyer beware".

Actually, this advice ignores the way the market is supposed to
function. Since everyone has access to the same information, the "bad"
companies will be discounted and the "good" companies will have a
premium, so that the expected gain remains equal. If there were a
discrepancy, and a stock was seen as particularly bad value or
particularly good value, the market would very quickly adjust the
price to reflect this. The only way to beat the market is to have
special information. This is why professional fund managers don't do
any better at picking stocks than someone who chooses at random.

Stathis Papaioannou

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