Another is, if you take money out of your left pocket and put it in your right pocket, you're no richer.
Merton Miller
To beat the market you'll have to invest serious bucks to dig up information no one else has yet.
You only need to make one big score in finance to be a hero forever.
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.
But in practice, if often comes down to not suffering a loss as big as the huge gain you made a while ago.
What counts is what you do with your money, not where it came from.
My main interest, however, was in economics, not law.
Arbitrage proof has since been widely used throughout finance and economics.
So everybody has some information. The function of the markets is to aggregate that information, evaluate it, and get it incorporated into prices.
Of course. I favor passive investing for most investors, because markets are amazingly successful devices for incorporating information into stock prices.
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.
I was born in Boston, Massachusetts on May 16, 1923, the only child of Joel and Sylvia Miller.
My research interests since then have shifted strongly towards the economic and regulatory problems of the financial services industry, and especially of the securities and options exchanges.
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.
My expertise was in public finance, particularly corporate taxation, since I had worked at the US Treasury.
I had some of the students in my finance class actually do some empirical work on capital structures, to see if we could find any obvious patterns in the data, but we couldn't see any.
What happened after publication of our paper was that, for the next 40 years, people said, all right, we now know the answer to the capital structure question under ideal conditions.
Junk bonds prove there's nothing magical in a Aaa bond rating.
I should mention that I am a member of the board of directors of Dimensional Fund Advisors.
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.
