Monday, August 22, 2016

Can you beat the market?

Our Friends at MR University have the answer:

1 comment:

  1. Can you beat the market?

    Making decision with uncertainty-random picking does just as well as the professionals do. Ignore the expect stock pickers is the suggestion from the video Can you beat the market? (2016)

    Past performance does not predict future performance. When it comes to stocks things can change by the hour/day/month/year. In an article by Higgins (2016) he states,” Although we talk about stock risk, the correct statement is stock price uncertainty. Stock prices in freely traded markets are driven by information. Information that is random and unknowable in advance. This is why a mountain of academic evidence shows that few, if any, people can consistently predict stock prices accurately.”

    Overall the market can be beat, yes in the short term. Long-term results of beating the market is very difficult to accomplish. Therefore, having your portfolio diversified in many different buckets is so important. At a certain point healthcare, may be the hot ticket and three months later pharmaceuticals or international markets.

    When we talk about this, we think about risk vs. uncertainty. The difference is risk is something you are willing to take depending on the reward but it can be quantified. Uncertainty for example is like having zero to limited knowledge and trying to do investment options. Getting yourself informed is a key component to help hedge against it. Since uncertainty will always be there the goal is to learn how to adapt to it.


    Can you beat the market? (2016, August 16). Retrieved December 20, 2016, from http://managerialecon.blogspot.com/2016/08/can-you-beat-market.html

    Higgins, B. (2016, March 4). Risk vs. Uncertainty. Retrieved December 20, 2016, from https://www.realinvestingjournal.com/reports/2015/3/4/risk-vs-uncertainty

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