Investment Fables: Exposing the Myths of "Can't Miss" Investment Strategies

Chapter 11. A Sure Thing: No Risk and Sure Profits

The Search for a Free Lunch

Linda loved getting something for nothing. She shamelessly took advantage of misprinted coupons at grocery stores and freebies at vacation resorts. She wondered whether there was a way she could apply her skills to improving her portfolio performance. Her friend Brian, who was a broker, suggested that there might be a way to take no risk and make high returns in the stock market. Lots of foreign stocks, he argued, had listings in the United States and some of them traded at much higher prices in the U.S. markets than they did in their local markets. Using his connections, he said he could buy shares cheap in the local market while borrowing the more expensive shares ...