Lessons Learned

• If someone freely gives you stock advice, ask why she can’t get anyone to pay them for the information.

• Events affect stock prices when they are anticipated, not when they actually occur.

• Even short-term traders need to be concerned with the long-term prospects of stocks.

• To compensate investors for taking on risk, market forces cause stocks on average to pay higher returns than safe government bonds.

• Survivorship bias makes mutual funds’ past performances seem misleadingly impressive.