Based on the previous lecture we have learned that there is only one optimal way to invest, but what if everyone did that? In this lecture we will see that this has surprising implications on market efficiency and can help us explain where stock returns come from. 

Additionally, in this lecture we show that investing is a zero sum game before costs (and a negative sum-game after costs). We’ll use this to show that when you stock pick, you implicitly to be smarter than the average investor. Finally, we will investigate index funds and evaluate when it’s worth perusing active management versus investing passively.