Spinning Profits From Errors
In investing, unlike in many other professions, mistakes can be quite advantageous. For those who disagree, my argument to you rests on the faultiness of the theory of efficient markets. This theory inherently implies that the market makes no mistakes: At any given time, prices reflect all knowable information about a stock. As a result, there is no "alpha" to be made by picking up a stock.
Of course, most of know that this assertion -- the idea that markets are 100% efficient -- is simply not true. Was Facebook (FB) priced correctly when it went public at $38? What about Groupon (GRPN) at $20? Were many stocks priced correctly in late 2008, when everyone simply sold to raise liquidity? ...302 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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