Tuesday, August 23, 2011

Arbitrage everywhere?

Kuznets Fallacy - The fallacy is to believe without historical inquiry that every price divergence represents an opportunity for arbitrage, buying low and selling high without cost of transaction. It doesn't seem so.

from D. McCloskey Bourgeois Dignity and Liberty

A good quote for anyone studying finance and economics. Opportunities exist and irrationality exists until you truly understand the dynamics of markets.

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