Economics 101 teaches that trading is rational only when it makes both parties better off. A baseball team with two good shortstops but no pitching trades one of them to a team with plenty of good arms but a shortstop who’s batting .190. Or an investor who is getting ready to retire cashes out her stocks and trades them to another investor who is just getting his feet wet in the market. But very little of the trading that occurs on Wall Street today conforms to this view. Most of it reflects true differences of opinion—contrasting predictions—about the future returns of a stock.* Never before
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