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How to Understand Market Pricing


How to Understand Market Pricing

Before getting into the 10 Steps to Better Investment Experience, it is important that we understand market pricing.

How do we understand it? Think about a pencil.

In 1958, Leonard E. Reed published an essay about the combination of miracles needed to create a pencil. We can relate that to the work by Eugene Fama, the Efficient Market Hypothesis. Fama wrote that professional investors had a poor track record trying to beat the market by stock picking.  Markets price all the available information efficiently driving the prices of stocks to a fair market value.

Why a pencil? This podcast teaches you the correlation of a pencil with the stock market, and how it helps us understand market pricing better.

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