• Jeremy Stein


Presidential Address: Sophisticated Investors and Market Efficiency. Jeremy Stein, August 2009, Paper. "Stock-market trading is increasingly dominated by sophisticated professionals, as opposed to individual investors. Will this trend ultimately lead to greater market efficiency? I consider two complicating factors. The first is crowding--the fact that, for a wide range of "unanchored" strategies, an arbitrageur cannot know how many of his peers are simultaneously entering the same trade. The second is leverage--when an arbitrageur chooses a privately optimal leverage ratio, he may create a fire-sale externality..." Link