Only in the last 10 to 20 years have we really understood where returns from stocks and investments come from, largely through the research of Eugene Fama and Kenneth French (both interviewed in this program). These two respected economists are in the forefront of a popular movement that takes the worry out of picking stocks. Dr. Fama developed the “efficient market theory”, a simple concept that says prices reflect all available information. Accordingly, it is virtually impossible to beat the market. Your’re always paying a fair price, whether you pay $1 or $100 per share. That’s the basic concept-the price always corresponds correctly to the worth of the stock. The market is a marvelously complex tool that takes information from all over the world and implements it into a pricing system. Everyone that draws breath in one way, shape or form affects the market. The market process the implications of the information, insight and actions of all six billion people in the world. For this reason the internal functioning of markets are virtually incomprehensible. No once can consistently accurately, pick stocks, forecast or predict what will happen on the economic horizon. Study after study has concluded there is zero correlation between the ability to pick the best stocks in one period and repeat such success in the next. The answer to prudent investing? Devote 30-minutes to view this rare academically researched program which was honored with two Telly Awards for excellence in the year 2000.
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