"Delusions" And Denials Keep the Markets Movin' Says Professor Malkiel @ Yahoo! Video A video that explains index funds and the efficient markets hypothesis from the founder of random stock walking and author of A Random Walk Down Wall Street, first published in 1973 and now in its seventh edition. A few interesting quotes:
THE RANDOM WALK IDEA
"... when news arises, the stock market reflects that news very quickly, without delay ... true news is random ... simply unpredictable. And, essentially the random walk idea is don't think you can predict the short term ups and downs of the market, it's essentially unpredictable ... because true news is unpredictable."
INDEX FUNDS: THE WAY TO INVEST
Wall street, in some sense, wants to insure that you tell people, this ... [investing] ... is too complicated, you can't do it yourself. The fact of the matter is you can do it yourself, do it very easily ... but you can do it with much less risk if the core of your portfolio is in low expense, very broadly-based index funds.
THE EFFICIENT MARKET HYPOTHESIS
"The efficient market hypothesis does not mean that prices are always right. How could they be. I teach a course in financial markets. I teach my students that the fundamental principle of valuation is that a stock ought to be worth the discounted present value of the whole stream of future cash flows, and that's the key word, future. Who knows what the future is going to be. The market is efficient enough so that it is unbeatable ... two-thirds of the active fund managers are always beaten by the indexes."
No comments:
Post a Comment