I really
liked the part where the author described the basic principles of the stock
market. He gave us a great example built on buying stuff in a store, in order
to approach us how it works.
Why it´s not possible to
get markedly better price than the others? His comparison was based on a
shopping line. Usually, after you get everything what you need, you want to get
away from the store as fast as you can - you are looking for the shortest
shopping line, but, this is not just your interest – everyone wants to find the
shortest shopping line. Therefore, when you get there, everything is equally
full – in one line there´s a guy with two trolleys full of various stuff, and
the other line (that seems to be faster) is already full of five people with
equal load, so you´ll wait for the same amount time in the first, and also in
the second line. Or if you see 100 dollars lying
on the ground, it wouldn´t be there for a long time – others will immediately
recognize what´s going on, and they will copy the strategy, and therefore
slower the whole process.
The
author also mentioned that the other important aspect is the coincidence. No
one could predict, that after you´ve chosen the shortest shopping line, the man
in front of you will have problem with getting the price of an avocado, because
it wouldn´t be in the register. The shopping line is now stuck, but who could
know that? As the author said: “Market is just a collection of individuals and if
they get things wrong, market does that as well.”
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