Trying to buy the most promising share is like trying to pick the shortest queue. But so is everyone else. And if it’s obvious which is the shortest line, people will move across and it won’t be the shortest queue much longer. In reality, hundreds (if not thousands) of professionals are trying to look for bargains on the most promising stocks, the shortest lines, and as a result, there are no predictable winners. If they were predictable, we’d all move into that line and it would eventually stop being the shortest. And so the cycle goes on and on…
“So when a financial expert offers you a guaranteed hot tip, think first before you hand over your cash” is how economist Tim Harford concludes this video. He argues, and quite rightly so, that is an efficient market, there can be no guarantees. The market is not entirely efficient however, and that is a debate for another day.
Got a minute? Check out Tim’s video below.
