Active stock pickers can now beat the market

If there is one simple lesson that investors have learned over the last two decades, it is this. Very few money managers can beat the market.

All of them charge fees ranging from the modest to the outrageous, and while very occasionally one gets on a winning streak, as a general rule a monkey armed with a dart will do a better job of picking stocks than a whole roomful of bright young MBAs equipped with Bloomberg terminals and double espressos.

Investors have quite rightly moved into low-cost tracker funds and exchange-traded funds.

The trouble is, nothing in the financial markets stays the same.

Last week, we leaned that a tracker fund was now the largest in the world, a moment that surely marks the final victory of passive over active investment. And yet for contrarians, and they are usually the people who make money in the stock market, that is surely also the moment to start backing active management again — or else picking stocks yourself.

As the trackers and ETFs take over, it will be possible to beat the market, and probably fairly easy. Why? Because the index funds will be buying blindly, ignoring the obvious winners and losers, and anyone who uses just a modicum of common sense should find that creates lots of opportunities.

via Active stock pickers can now beat the market – Matthew Lynn’s London Eye – MarketWatch.

Deci la treaba domnilor!

One comment

  1. De la Cosmin:

    Uite articolul despre care ti-am povestit azi: http://investorplace.com/2009/01/12-keys-to-trading-earnings/#.UoOZX5FvTR3

    Eu am avut 5 experimente:
    AWAY call, buy 1.5 – sell 5
    SCTY put, buy 2.4 – sell 3.5
    GRPN call, buy 0.85 – sell ? (sunt pe zero) – inca il tin, desi a ratat earnings, nu a scazut, asteptarile erau mici;
    SINA put, buy 2.22 – sell ? (am minus 80%)
    CSCO call, buy 0.4 – sell 2

    Din 5 tranzactii, 3 au fost cu succes (x3, x1.5, x4), 1 pe zero, si 1 pierdere.

    Pare o strategie speculativa functionala. Ideea este ca pariezi putin in tranzactii cu probabilitate mare.

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