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Winning the Loser’s Game, 6th edition: Timeless Strategies for Successful Investing by Charles Ellis

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CHAPTER 10RETURNS

INVESTMENT RETURNS COME IN TWO VERY DIFFERENT FORMS: quite predictable cash received from interest or dividends and quite unpredictable—in the short run—gains or losses in market price. Investors who devote most of their time and skill to trying to increase returns by capitalizing on changes in market prices—by outsmarting each other—are making a big mistake.

Changes in market price are caused by changes in the consensus of active investors about what the price of a stock ought to be. This consensus is determined not by individual investors but by thousands of professional investors constantly seeking opportunities for investment profit. To find these opportunities, professional investors:

• Study monetary and fiscal economics ...

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