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Pastimes : The Darwin Awards for Investing
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To: Edwarda who wrote (31)11/4/1999 5:35:00 PM
From: The Other Analyst  Read Replies (1) of 52
 
Couldn't one argue that their trading actions constituted really poor information or none at all, in which case, the markets are better for their absence?

This is more interesting than I realized before. Actually, this is not like Darwinian survival. In the Darwinian world, it is not a zero sum game. Species live and die. Stupid species are more likely to die off.

But in the investing game, one trader's loss is another's gain. So when dumb money comes in chasing a hyped idea, and smart money sells to them, then the smart money has been rewarded. The dumb money leaves the game. The smart money stays in. If the market were perfectly efficient, none of that would happen. We need the dumb money to come in from time to time and feed the smart money, keeping them in the game.

Well, this is turning into a waste of time as I overthink it.
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