Fiduciary duty in dysfunctional markets
Financial markets play a central role in the capitalist economy, allocating new savings to productive investment, acting as a signalling device to corporate management, and providing liquidity to investors. The efficient markets paradigm claims that competition among investors keeps asset prices close to fair value. A new interpretation contends that stock markets have morphed into a contest between two sets of investors: those seeking short-term gain matched against those targeting long-term value. This unending battle corrupts prices, creates macroeconomic instability and costs vast sums in asset management fees.
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