The Joy of Stocks

Two traders are friends and sit next to each other at terminals where they go about work each day, Chance and Oswald.? The traders come early to study the markets, six o’clock in the morning in New York.? They sip coffee and nosh on bagels.

When the markets opened one day, a number of stocks rocketed up.? The visual was amazing, and both traders were riveted.

“Those stocks are rising fast. That is the joy of stocks!” said Chance.

Oswald smiled at this.? But being schooled in Efficient Market Theory, he could not accept his friend’s statement.??

“These stocks are just behaving in accordance with market knowledge.? You don’t have that knowledge.? How can you know their joy?” asked Oswald.

Chance replied, “When someone sees smoke, they head for the exit.? They don’t wait for everyone else to do the same.”

“Agreed,” said Oswald.

“Efficient Market Theory says that some or all available knowledge is already reflected in the price of the stock. I am saying that will eventually be true, but that there is a window where wise reactions can yield joy,” said Chance.

“Ah, but early is not early.? You can’t outwit the entire market to find joy,” said Oswald.

“I know the joy of stocks sitting here and looking at this display,” said Chance.