Wednesday , October 18 2017
Home / Carpe Diem / More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it – Publications – AEI

More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it – Publications – AEI

Summary:
AEI More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it Just out from the SPIVA® U.S. Scorecard Mid-Year 2017 report, based on returns through June 30, 2017: Over the five-year period, 82.38% of large-cap managers, 87.21% of mid-cap managers, and 93.83% of small-cap managers lagged their respective benchmarks. Similarly, over the 15-year investment horizon, 93.18% of large-cap managers, 94.40% of mid-cap managers, and 94.43% of small-cap managers failed to outperform on a relative basis (see table above). As Burton Malkiel wrote in the chapter “Bow to the Wisdom of the Market” in his book Random Walk Guide to Investing; Ten Rules for Financial Success: Who wants to admit that an amorphous, inorganic entity such as the financial

Topics:
Mark Perry considers the following as important: , ,

This could be interesting, too:

Tradablepatterns writes Ethereum (ETHUSD) Daily MACD Trying to Negatively Cross

Mark Perry writes The best sentence I read today….. – Publications – AEI

Tyler Durden writes “There Were No Calls, That’s Absolutely Crazy”: How The Stock Market Died

Mark Perry writes Why do American parents push their kids so hard when it comes to sports, but not so much when it comes to academics? – Publications – AEI

AEI
More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it

More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it - Publications – AEI

Just out from the SPIVA® U.S. Scorecard Mid-Year 2017 report, based on returns through June 30, 2017:

Over the five-year period, 82.38% of large-cap managers, 87.21% of mid-cap managers, and 93.83% of small-cap managers lagged their respective benchmarks. Similarly, over the 15-year investment horizon, 93.18% of large-cap managers, 94.40% of mid-cap managers, and 94.43% of small-cap managers failed to outperform on a relative basis (see table above).

As Burton Malkiel wrote in the chapter “Bow to the Wisdom of the Market” in his book Random Walk Guide to Investing; Ten Rules for Financial Success:

Who wants to admit that an amorphous, inorganic entity such as the financial market is smarter than they are? Certainly not the financial professionals who are lucrative fees and commissions for telling naive customers that they know best. And certainly not do-it-yourself day traders who know, just absolutely know, that they can pick and choose where few, if any, have profited before.

And yet the cold, unflattering — and, yes, unexciting — truth is that the financial market, that sprawling clumsy behemoth, is smarter than any individual. Smarter, that is, in that no one can consistently outfox it by predicting its movements. The road to your financial success is paved with this understanding. When you were growing up, you probably heard the phrase, “Mother knows best.” Now that you are an investor, remember the phrase, “The market knows best.” Neither you nor any guru can consistently beat it over time.

 

More evidence that it’s very hard to ‘beat the market’ over time, even the financial professionals can’t do it
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

Leave a Reply

Your email address will not be published. Required fields are marked *