stocks, and then discusses a more reliable but undeniably duller method of accumulating personal wealth.

Why It Is Hard to Get Rich Quick: The Random Walk Theory

The chief problem with attempting to buy stock in companies that will have higher prices in the future is that

many other financial investors are trying to do the same thing. Thus, in attempting to get rich in the stock

market, it is no help to identify a company that is going to earn high profits if many other investors have

already reached the same conclusion, because the stock price will already be high, based on the expected high

level of future profits.

The idea that stock prices are based on expectations about the future has a powerful and unexpected

Access for free at openstax.org
17.3 • How to Accumulate Personal Wealth 425

implication. If expectations determine stock price, then shifts in expectations will determine shifts in the stock
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