Free Investment Advice

Source: Amol Agrawal, mostlyeconomics.wordpress.com

“You often come across people who crib about how bad the stock brokers tips are. Despite this people often look forward to any tip from their/other’s brokers on which particular stock would rise or fall and make their decisions accordingly.

Though, there is one man who surely cashed on the stock-broker’s tip- Harry Markowitz, the 1990 Nobe Prize Laureate. I came across this fantastic weblink where all the who’s who of finance have discussed history of finance and their contribution to the field.

I was going through this Markowitz transcriptand here is the discussion in brief: (Buser is the interviewer)

Buser:Tell us a little bit more about how you got this idea for your dissertation topic.You were a graduate student at the time?

Markowitz: Right. I was at the stage where I had to pick a dissertation topic.

So I went to my advisor, Professor Jacob Marschak.  He was busy when I got there, so I waited in his ante room.  There was another fellow in the ante room who turned out to be a broker waiting for Marschak.  We chatted while we were there, and he suggested that I should maybe do a dissertation on the stock market.  So I went in.

Buser: A stockbroker gave you the idea?

Markowtz:That’s right, a stockbroker.

Buser:A tip that paid off.

Markowitz:Yeah.  Some biographer of mine said this was the best advice a stockbroker has ever given.  And I agree…….

This is simply fantastic. I had read this long back in Peter Bernstein’s book- Capital Ideas and thrilling to read Harry confirming this. A stock-broker’s tip that led to development of portfolio theory and subsequently the Nobel Prize!!

Well, actually the stock-broker ideas can really lead to some good research ideas. They can point to some event studies, why certain group of stock moves up/down, etc. This has indeed been the case as we have a lot of research in financial markets which can only shape up witht he help of brokers. Many papers even give the credit to certain stock-broking firm, stock-broker etc. But then the public only seeks them for stock prices, something which is highly random.”