The market economy is very good at what it does, which is something like “exploit money-making opportunities” or “pick low-hanging fruit in the domain of money-making”. If you see a $20 bill lying on the sidewalk, today is your lucky day. If you see a $20 bill lying on the sidewalk in Grand Central Station, and you remember having seen the same bill a week ago, something is wrong. Thousands of people cross Grand Central every week – there’s no way a thousand people would all pass up a free $20. Maybe it’s some kind of weird trick. Maybe you’re dreaming. But there’s no way that such a low-hanging piece of money-making fruit would go unpicked for that long.
In the same way, suppose your uncle buys a lot of Google stock, because he’s heard Google has cool self-driving cars that will be the next big thing. Can he expect to get rich? No – if Google stock was underpriced (ie you could easily get rich by buying Google stock), then everyone smart enough to notice would buy it. As everyone tried to buy it, the price would go up until it was no longer underpriced. Big Wall Street banks have people who are at least as smart as your uncle, and who will notice before he does whether stocks are underpriced. They also have enough money that if they see a money-making opportunity, they can keep buying until they’ve driven the price up to the right level. So for Google to remain underpriced when your uncle sees it, you have to assume everyone at every Wall Street hedge fund has just failed to notice this tremendous money-making opportunity – the same sort of implausible failure as a $20 staying on the floor of Grand Central for a week.
