Tim Harford’s new book, “The Undercover Economistâ€? receives a favorable review from the Economist magazine. It sounds like fans of “Freakonomicsâ€? may enjoy this one as well. You can read an extract online.

Tim Harford is also interviewed by The Motley Fool on the release of his book. An excerpt from the Q&A:

A lot of economists seem to believe in efficient markets. Do you?
The market is smart, not perfect. You can beat the market, but it won’t happen by accident or because you trust the stock tips in the papers.

The stock market is a bit like a row of lines at the supermarket checkout. Picking a great value stock is like picking the shortest line: It’s possible, but never obvious. If it had been obvious which was the shortest line, then people would have joined it, and it wouldn’t be the shortest anymore. The same with a good stock pick: If it were a sure thing, the price would already have risen. That doesn’t mean there are no good picks, just that you need to work to find them.

The truth is, unless you’ve made a study of supermarket lines, you may as well just pick one at random and not worry about it. In the same way, if you have no time or inclination to research the stock market, then you should just buy an index fund. I would only advise someone to start picking their own stocks if they enjoy it and are willing to do the homework.

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