Not Getting Rich in the Stock Market

John Hartwick
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John Hartwick: Queen’s University

Chapter 6 in A Brief History of Price, 1993, pp 99-126 from Palgrave Macmillan

Abstract: Abstract Investing in the stock market animates some of our basic drives. We would all like to strike it rich and deep down we think that buying lottery tickets is a less than lofty human pursuit. Buying equities in the stock market seems like a lottery without the tawdriness of pure gambling. Somehow by buying stocks, one is building the economy and dividends provide aproof that one is not simply buying a lottery ticket by another name. But steely eyed economists will tell you that in fact you are buying a lottery ticket when you buy a portfolio of stocks and that you will end up richer by about the same amount as you would have ended up had you put you funds in a long tenn savings deposit. Reminiscent of that tedious cliche: There is no free lunch’? Years ago a financial advice book was written with the title, But Where are the Clients’ Yacht si The brokers had apparently done well but the customers buying and selling stocks had not. The modern rendering of the point that on average one only makes ‘the normal rate of return’ in the stock market is ‘the efficient markets hypothesis’. Samuelson developed the details of the efficient markets hypothesis in the 1960s. (He has apparently been active in the stock market and is seemingly a wealthy man. But he is the author of a very successful introductory textbook in economics and his large nest-egg must represent his abundant royalties, rather than above average winnings in the markets.)

Keywords: Stock Market; Risk Aversion; Asset Price; Mutual Fund; Capital Gain (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1057/9780230374669_6

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