Planet Money Summer School begins its second season with a course on investing, focusing on big economic ideas. Hosted by Cardiff Garcia, the series aims to explain various markets, their impact on the economy, investment risks, and how to make wise investment decisions, explicitly stating it's not a get-rich-quick scheme. The first class features professors Allison Trager and Mihir Desai, who highlight risk and the broad life decisions tied to investing. The episode explores where stock prices come from, presenting two theories: stock prices reflect collective guesses about a company's future performance (wisdom of crowds), and stock prices are driven by speculation on what others will do (Keynesian beauty contest). Through past Planet Money episodes and experiments, the hosts and professors discuss these theories, using examples like guessing the weight of a cow and a cute animal beauty contest to illustrate the dynamics of the stock market and investor behavior, concluding that both theories are relevant over different time horizons.
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