Comments on: Just because you’re rich doesn’t mean you’re smart http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Observer http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5657 Wed, 19 Aug 2009 02:27:44 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5657 I believe this was best expressed in Fiddler on the Roof: “When you’re really rich they think you know.”

If I read this correctly, I would argue that there’s a bit of a logical fallacy with regard to how you’re defining the corollary to the EMH.

In the terms you’ve laid out here, the EMH effectively says “If the market is efficient, smart doesn’t equal rich.” Your description of the corollary is essentially, “Rich does equal smart, if market is efficient.”

But that’s actually the converse of the original EMH statement in these terms, which is not logically equivalent. The only statement that would be logically equivalent to the original EMH statement in this form is the contra-positive, which would be “If smart equals rich, then market is not efficient.”

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By: Jonathan http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5641 Tue, 18 Aug 2009 21:11:09 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5641 Matt Stevens – So, Dykstra example wasn’t so bad after all…

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By: Kint http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5640 Tue, 18 Aug 2009 21:03:47 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5640 This has nothing to do with efficient markets.. this is a stupid argument.

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By: Dan Daoust http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5638 Tue, 18 Aug 2009 20:38:33 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5638 Congratulations on blowing down a strawman. Joe’s point is not that all rich people are smart. His point is that a rich person can hire an adviser or lawyer to review a proposed deal or document, and should do so when $24 million is on the line. If the rich person fails to do so, he has only himself to blame. For the poor, on the other hand, hiring an adviser is not always an available option.

Kapish?

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By: Jon H http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5619 Tue, 18 Aug 2009 17:51:47 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5619 ” People who achieve wealth and success without exploiting other people usually do so by exploiting opportunities and taking significant risks.”

And then you have the Gary Colemans of the world.

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By: AndrewBW http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5615 Tue, 18 Aug 2009 16:37:24 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5615 You say: “[W]hile it’s certainly possible to take advantage of the financially-illiterate poor (lotteries, numbers games, payday lending, overdraft fees, etc) it’s equally lucrative to take advantage of the financially-illiterate rich…”

Instead of “it’s equally lucrative” I’d say “it’s FAR MORE lucrative.”

Bernie Madoff wasn’t swindling the homeless.

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By: Lgg http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5611 Tue, 18 Aug 2009 15:52:37 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5611 I don’t feel terribly sorry for Mrs. Leibowitz. She certainly worked very hard to earn her money, but if she was unwilling to apply one of the most basic principles in life (save for the rainy days) and instead went to Art Capital to pay for her expensive lifestyle, well, she had that coming.

Sorry for the social darwinist comment, but it really grinds my gears to see so much coverage of Mrs. Leibowitz’s (self-inflicted) travails. It reminds me of those NBA players who, during the 1998 strike, were really worried that they had to sell one of their Ferraris to keep their lifestyles. Please….

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By: dvictr http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5610 Tue, 18 Aug 2009 15:51:12 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5610 correction: just because you have a CFA and a HBS MBA does not mean you are rich

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By: Griff http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5609 Tue, 18 Aug 2009 15:35:54 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5609 Or just like on the golf course…it’s good to be lucky.

One could surmise as much about Mavs owner Mark Cuban…his business acumen in owning the NBA team has served him well (absent a NBA ring, of course). And yet, the dude also was incredibly lucky on market timing, selling his company to Yahoo prior to Nasdaq topping out and then once his agreements are in the clear, using options in a strategy to short Yahoo shares as they tumbled down.

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By: Sterling http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/comment-page-1/#comment-5607 Tue, 18 Aug 2009 15:00:20 +0000 http://blogs.reuters.com/felix-salmon/2009/08/18/just-because-youre-rich-doesnt-mean-youre-smart/#comment-5607 Whenever we’ve gone back and forth on topics like this, for years now, you often omit the concept of risk. The American Dream is NOT terribly ‘meritocratic’. People who achieve wealth and success without exploiting other people usually do so by exploiting opportunities and taking significant risks. Sometimes risk pays off, sometimes it doesn’t.

Financial journalists watch speculators all day long and often fail to see the legions of income investors quietly sitting on their blue chips and utility stocks for decades between sales.

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