

Fool School: Can You Beat the Big Guys?
Nov 11, 2023
Jonathan Berk, a finance professor at Stanford and co-host of "All Else Equal: Making Better Decisions," dives into the world of individual stock investing. He explores the importance of decision-making and its ripple effects in markets. Berk debates the reputation of short-term investing and whether it truly deserves the label of being detrimental. Additionally, he sheds light on the time horizon needed to distinguish between luck and skill, emphasizing the nuances that individual investors face in a competitive landscape.
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Episode notes
Short-Term vs. Long-Term Investing
- Short-term stock selling implies a buyer who pays a fair price, potentially a long-term investor.
- Ultimately, the selling price reflects the company's long-term prospects, regardless of holding duration.
Michael Jordan and Equilibrium Thinking
- Jonathan Berk uses Michael Jordan's free throw ranking to illustrate equilibrium thinking.
- Despite being a top player, Jordan's ranking was lower due to double coverage, highlighting how others' reactions impact outcomes.
Trading Advice
- When trading stocks, consider who you're trading with and their knowledge.
- Avoid frequent trading, as it increases the risk of losing to someone with better information.