Looking for stock tips? Here’s a good one: don’t ask an economist.
First, it is difficult to consistently beat the market. Every day, millions of investors analyze company reports, earnings announcements, policy changes, interest rates, global developments, and countless other pieces of information. Through their collective buying and selling decisions, new information is rapidly reflected in stock prices. By the time I finish reading a company’s annual report, thousands of other investors competing for returns have already studied the same information and traded on it. As a result, opportunities to earn superior returns using publicly available information are limited. This idea lies at the heart of what economists call market efficiency.
