Bridge over ocean
1 January 1995 Financial Analysts Journal Volume 51, Issue 1

The Only Game in Town

  1. Jack Treynor

Investors' confusion between market gains and trading gains helps explain why they continue trading even though it rarely improves their performance. Then, too, some investors reason that if trading based on random selection is as likely to prove profitable as not, trading based on any information whatever will result in performance better than neutral. The key to the fallacy in their reasoning is the market maker, who must impose a spread in order to survive.

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