CHAPTER 7Why Stock Prices Don’t Create Real Wealthimage


WITH EVERYBODY PAYING SO MUCH ATTENTION to stock prices, we need to understand how they are set and what they really mean. In this chapter we will look at some forces that influence prices and why they don’t deserve nearly the prominence they receive for measuring the wealth of individuals, retirement portfolios, and the economy. Stock prices are like props that hold up a set for a Western movie. Knock out a few critical ones and the whole streetfront will collapse, saloon and all.

Obviously, what is said in this chapter conflicts with much conventional financial theory and nearly all of the ...

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