Two finance professors see a $100 bill on the sidewalk. As one professor reaches for it, the other says, “Don’t bother; if it was real, someone would have picked it up by now.”
Finance professors are fond of saying that financial markets don’t leave $100 bills lying on the sidewalk, meaning that if there was an easy way to make money, someone would have figured it out by now.
This is partly true—but only partly. Too often, investors buy stocks based on worthless information. Any news in, say, The Wall Street Journal, isn’t really news in that it has surely been embedded in stock prices already. It is not a $100 bill on the sidewalk because what everyone knows isn’t worth knowing. On the other hand, stocks are sometimes mispriced—not because investors haven’t read the Journal, but because investors have overreacted or made other judgmental errors.
$100 Bills on the Sidewalk will help investors distinguish between genuine and counterfeit $100 bills up.