1.
I should mention that I am a member of the board of directors of Dimensional Fund Advisors.
Merton Miller
2.
To beat the market you'll have to invest serious bucks to dig up information no one else has yet.
Merton Miller
3.
As an economics undergraduate, I also worked on a part-time basis in Cambridge, Massachusetts, for a company that was advising customers about portfolio decisions, writing reports.
Merton Miller
4.
What counts is what you do with your money, not where it came from.
Merton Miller
5.
You only need to make one big score in finance to be a hero forever.
Merton Miller
6.
I favour passive investing for most investors, because markets are amazingly successful devices for incorporating information into stock prices.
Merton Miller
7.
I had some of the students in my finance class actually do some empirical work on capital structures, to see if we could find any obvious patterns in the data, but we couldn't see any.
Merton Miller
8.
Everybody has some information. The function of the markets is to aggregate that information, evaluate it and get it incorporated into prices.
Merton Miller
9.
Diversification is your buddy.
Merton Miller
10.
If there's 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that's all that's going on. It's a game, it's a chance operation, and people think they are doing something purposeful... but they're really not.
Merton Miller
11.
Junk bonds prove there's nothing magical in a Aaa bond rating.
Merton Miller
12.
Most people might just as well buy a share of the whole market, which pools all the information, than delude themselves into thinking they know something the market doesn't.
Merton Miller
13.
... Any pension fund manager who doesn't have the vast majority-and I mean 70% or 80% of his or her portfolio-in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance!
Merton Miller
14.
But in practice, if often comes down to not suffering a loss as big as the huge gain you made a while ago.
Merton Miller
15.
My expertise was in public finance, particularly corporate taxation, since I had worked at the US Treasury.
Merton Miller
16.
Everyone recognizes that's a joke because obviously the number and shape of the pieces doesn't affect the size of the pizza. And similarly, the stocks, bonds, warrants, etc., issued don't affect the aggregate value of the firm.
Merton Miller
17.
Arbitrage proof has since been widely used throughout finance and economics.
Merton Miller