Can Monkeys Pick Stocks Essay
Can Monkeys Pick Stocks Better than Experts? — Automatic Finances
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Can Monkeys Pick Stocks Better than
Experts?
by Jason Unger
We've spent plenty of time explaining why investing in passive, low-cost index funds will out-earn actively managed funds in the long-run, and that most fund managers can't even outperform the indexes they're trying to beat over time.
33 tweets retweet
The underlying theme of these posts is that stock market "experts" aren't really experts at all. They may be able to get lucky over a short period of time, but the longer they invest, the less likely they are to continuously beat the market. (Even Warren Buffett says that most investors should choose index funds.)
But professional investors should have some real knowledge of beating the market, right? Isn't that …show more content…
Enter monkeys throwing darts.
The Wall Street Journal's Dartboard Contest
In his popular personal finance book arguing that investors can't consistently beat the market (A
Random Walk Down Wall Street), economist Burton Malkiel says that "a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts."
Sounds like a challenge.
So, in 1988, the Wall Street Journal decided to see if Malkiel's theory would hold up, and created the Dartboard Contest.
How it worked: Wall Street Journal staffers, acting as the monkeys, threw darts at a stock table, while investment experts picked their own stocks. After six months, they compared the results of the two methods. The WSJ even solicited stock picks from some of its readers, and compared them, too.
After 100 contests, the results were in. From Investor Home's great description of the contest:
http://www.automaticfinances.com/monkey-stock-picking/
2012/2/29
Can Monkeys Pick Stocks Better than Experts? — Automatic
頁1/3
Can Monkeys Pick Stocks Better than
Experts?
by Jason Unger
We've spent plenty of time explaining why investing in passive, low-cost index funds will out-earn actively managed funds in the long-run, and that most fund managers can't even outperform the indexes they're trying to beat over time.
33 tweets retweet
The underlying theme of these posts is that stock market "experts" aren't really experts at all. They may be able to get lucky over a short period of time, but the longer they invest, the less likely they are to continuously beat the market. (Even Warren Buffett says that most investors should choose index funds.)
But professional investors should have some real knowledge of beating the market, right? Isn't that …show more content…
Enter monkeys throwing darts.
The Wall Street Journal's Dartboard Contest
In his popular personal finance book arguing that investors can't consistently beat the market (A
Random Walk Down Wall Street), economist Burton Malkiel says that "a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts."
Sounds like a challenge.
So, in 1988, the Wall Street Journal decided to see if Malkiel's theory would hold up, and created the Dartboard Contest.
How it worked: Wall Street Journal staffers, acting as the monkeys, threw darts at a stock table, while investment experts picked their own stocks. After six months, they compared the results of the two methods. The WSJ even solicited stock picks from some of its readers, and compared them, too.
After 100 contests, the results were in. From Investor Home's great description of the contest:
http://www.automaticfinances.com/monkey-stock-picking/
2012/2/29
Can Monkeys Pick Stocks Better than Experts? — Automatic