Paul Samuelson said:
"The nonpredictability of future stock prices from past and present prices is the sign, not of failure of economic law, but the triumph of economic law after competition has done its best.
Do you agree? Why or why not?
"The reason stock prices jump around so much, and the reason stocks are considered such a risky investment, is that there is nothing clear-cut about their value."
What does he mean?
"When the broker calls to say, "Hurry, hurry, hurry!" that's nonsense. If the stock were sure to go up, it would already be up." Do you agree? Why or why not?
Jack Treynor said:
"You may not get rich by using all the available information, but you surely will get poor if you don't."
What does he mean?
What is the Rational Expectations Hypothesis?
Fischer Black wrote a paper called “Noise.”
What is a noise trader and are noise traders good or bad for investors trying to beat the market?
In the first class, we discussed insider trading. Surprisingly to the professor, many students did not find insider trading objectionable, as it was just a part of “the game.”
What is your position on insider trading? Why?
Does the following statement support or oppose you position?
"If people with inside information keep it to themselves and fail to act on it, they will not be driving market prices toward their shadow prices and there will be that much more noise in the market."
Respond to the following statement:
"Thus, does well-meaning regulation often lead to unexpected and undesirable consequences?"