In 1940, Fred Schwed, Jr. wrote a book about investing called Where Are the Customers’ Yachts? The book begins with the following lines:

“Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. He said,

‘Look, those are the bankers’ and brokers’ yachts.’

‘Where are the customers’ yachts?’ asked the naïve visitor.”¹

The theory presented here explains why the customers’ yachts were not more conspicuous when Fred Schwed wrote his famous book, and why they probably won’t be in the future. It also shows why bankers, brokers or anyone else perceived as having valuable information will just naturally attract money.