Dr. Noel D. Campbell Asst. Prof. of Business Administration North Georgia College & St. Univ. Dahlonega, GA 30597 (706)864-1621 >>> [EMAIL PROTECTED] 07/13/02 09:52 AM >>> >Ie, why do people accept lower returns just for the >privilige of >picking the stocks themselves?
>Mostly because they believe they are smarter or more >knowledgable than average and will outperform the >market. Based on my anecdotal evidence from teaching money & banking to adults, I agree with Dr. Dickens. People overestimate their own abilities and the abilities of people they know personally. We know this from other fields of study as well. The general efficiency (not to say perfect efficiency) of markets is a big component of my course. Nevertheless, every semester I have numerous students offering me hot tips, advice, etc. they created or "got from a good friend." I respond with the litany of diversify, buy, & hold. Students invariably reply, "Yes, that's good for the market overall, but I or my friend) am really smart. While I may not outguess the market every time, I've certainly outguessed the market this time." Oddly enough, I've never had a student come see me in a later semester telling me about his portfolio's performance. Noel
