Merton Miller
Merton Miller
Merton Howard Millerwas an American economist, and the co-author of the Modigliani–Miller theorem, which proposed the irrelevance of debt-equity structure. He shared the Nobel Memorial Prize in Economic Sciences in 1990, along with Harry Markowitz and William F. Sharpe. Miller spent most of his academic career at the University of Chicago's Booth School of Business...
NationalityAmerican
ProfessionEconomist
Date of Birth16 May 1923
CountryUnited States of America
numbers ties pieces
Everyone recognizes that's a joke because obviously the number and shape of the pieces doesn't affect the size of the pizza. And similarly, the stocks, bonds, warrants, etc., issued don't affect the aggregate value of the firm.
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Arbitrage proof has since been widely used throughout finance and economics.
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As an economics undergraduate, I also worked on a part-time basis in Cambridge, Massachusetts, for a company that was advising customers about portfolio decisions, writing reports.
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But in practice, if often comes down to not suffering a loss as big as the huge gain you made a while ago.
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I should mention that I am a member of the board of directors of Dimensional Fund Advisors.
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I had some of the students in my finance class actually do some empirical work on capital structures, to see if we could find any obvious patterns in the data, but we couldn't see any.
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I favour passive investing for most investors, because markets are amazingly successful devices for incorporating information into stock prices.
thinking games people
If there's 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that's all that's going on. It's a game, it's a chance operation, and people think they are doing something purposeful... but they're really not.
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My expertise was in public finance, particularly corporate taxation, since I had worked at the US Treasury.
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Everybody has some information. The function of the markets is to aggregate that information, evaluate it and get it incorporated into prices.
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... Any pension fund manager who doesn't have the vast majority-and I mean 70% or 80% of his or her portfolio-in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance!
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Most people might just as well buy a share of the whole market, which pools all the information, than delude themselves into thinking they know something the market doesn't.
money
What counts is what you do with your money, not where it came from.
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To beat the market you'll have to invest serious bucks to dig up information no one else has yet.