Noise Trader Risk in Financial Markets is a demonstration of how quickly and completely beliefs in market efficiency can fall apart once one abandons the assumption that everybody else is acting optimally. Not much is needed to keep the aggressive and profit-seeking from being able to iron out and neutralize the disturbances to the market created by the irrational.
But the way the paper was edited and published makes it more difficult to follow than it should be. I have always thought that it would be a service to provide a better—a more intuitive—derivation of the "Noise Trader" argument than the one that the JPE published. The published version is not easy enough to follow, and leaves too much implied, or simply unsaid...
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