After a semester of teaching Securities Regulation at the UofU law school, Ben has tried to emphasize to the students the concept of "market efficiency", which, more or less means that stock prices are as accurate as the information (including gossip) that is out there in the financial world and, without inside information, it is not really possible to beat the general market return. Acceptance of this idea normally results in people purchasing index funds composed of a diverse group of stocks -- as opposed to purchasing a single stock because you think it's going to beat the general market return.
So, what does my intelligent, securities reg-teaching husband do? He puts $10,000 of MY rollover IRA into E*Trade stock earlier this week. Why? He hears that they might be bought out. Other possible outcomes include unremarkable minor fluctuation OR bankruptcy resulting from other Internet stock trading companies slowly absorbing defecting E*Trade customers.
Here's to (i) winning the lottery and (ii) an E*Trade buyout.
7 comments:
Good luck!!!
So, after today Colby thinks it may not have been such a bad idea... guess you'll have to wait and see what direction it goes from here. Good luck.. hope you get rich from this.. or win the lottery.
Oh snap! One time my husband invested $4K into a start up. We do not speak of it. Your husband, however, is well-versed in these sorts of things and will probably do just fine. Who needs that pesky 401K, anyway?
sweet. ben's got the guts. julie's got the bling. good combo. :) happy thanksgiving! xoxo, Di
Well, last year Dave invested $10K into an on-line video game. E-trade sounds pretty legit at this point. Dave is still promising big payoffs with the video game though. It is due to be released in 1/07 so everyone get online and play Saga with your fam for New Year's Eve. Know that it will be for the good cause of making us rich!
Sounds exactly like something John would do. Last time he thought he could beat the market, his attempts were obstructed by what I was working on at the time. We ended up with an index fund that somewhat represented the category in which he had wanted to purchase individual stocks instead of the individual stocks themselves.
So tempting isn't it? Despite all we know about "market efficiency", we still go for the quick buck if we think there's a chance. It's just the human in us all! Good luck with that. I'm more like you Julie....stick with what we know works, even if it is slow, it is secure. Matt would be afraid for his life if he did something like that. It sounds like you are much kinder and like to watch him squirm while watching him desperately hope something good comes of his action. Actually, I think your way may be more painful.
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