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Episode 258: Prof. Meir Statman: Financial Decisions for Normal People

The Rational Reminder Podcast

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How to Be a Rational Investor

Miller and Modigliani, two well-known founders of Standard Finance, defined rational investors as people who are interested only in maximizing their wealth. This really is a definition that they used in their exposition of dividends and argument as to why dividends do not matter. If you don't get a cash dividend from a company you can create what we know now as homemade dividends by selling shares so they are just different in form but not in substance. What matter is just the substance but normal people care about form as well as substance.

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