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The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

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Chapter 12: Beating the Market with Warren Buffett and Ed Thorp

Just because professional investors as a group can’t reliably outperform the market doesn’t mean that some professional investors can’t.

In May 1984, Columbia Business School hosted a conference to commemorate the fiftieth anniversary of Security Analysis, the book hatched in Benjamin Graham’s Columbia night school class in the late 1920s that had transformed Wall Street. The organizers invited two speakers to debate what Graham and coauthor David Dodd had wrought. One was Warren Buffett, a former Graham student who had begun to outshine his teacher. The other was finance professor Michael Jensen, who had declared a few years earlier that there was “no other proposition in ...

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