In real-world Finance, they don't pay for elegance. They pay for power - predictive power.

Less volatile stocks tend to have negative abnormal profits; more volatile stocks tend to have positive abnormal profits.

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.

In real-world Finance, they don't pay for elegance. They pay for power - predictive power.

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.

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.

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