ECONOM 1014 Chapter Notes - Chapter 23: Nasdaq Composite, Doubling Time, High Tech
Document Summary
Active funds: pick a few stocks they think will do well. Passive funds: attempt to mimic a broad stock market index of about 500 large firms representative of the us economy. Since for every buyer there is a seller, you can"t get rich by buying and selling on public information . Efficient markets hypothesis: the claim that the prices of traded assets reflect all publicly available information. The prices of traded assets, such as stocks and bonds, reflect all publicly available information. Unless an investor is trading on inside information, he or she will not systematically outperform the market as a whole over time. Diversity: pick a lot of different stocks in order to add diversification to your portfolio. Buy many stocks, in many sectors of the economy, and in many countries. That way, when one thing goes bad, it doesn"t ruin you.
