When you buy a lottery ticket, you don't know how tickets have been sold. But sold they have been. And there is an underlying distribution for the game.

The New Finance focused on the market's major systematic mistake. In failing to appreciate the strength of competitive forces in a market economy, it over estimates the length of the short run. In doing so, it overreacts to records of success and failure for individual companies, driving the prices of successful firms too high and their unsuccessful counterparts too low.

When you buy a lottery ticket, you don't know how tickets have been sold. But sold they have been. And there is an underlying distribution for the game.

If we observe the performance of only those funds that remain active, we will tend to find that the average performance of the surviving funds exceeds that of the market.

CAPM also makes use of what is called a "definitional identity." This is something that is automatically true, simply because of the way things have been defined.

Although efficient markets people still go around saying there is a "mountain" of evidence supporting their hypothesis, the truth of the matter is that it's a very old mountain that's now eroding rapidly into the sea.

The cheaper the stock, the better the outlook for future returns.