According to CityAM: Even a monkey picking investments at random could beat funds
tracking the US stock market, according to research published yesterday.
Academics at Cass Business School used a computer to
simulate the stock-picking abilities of a monkey and pitted these random
choices against a traditional market capitalisation weighted index to discover
that the chimp won every time. The
study, based on monthly US share data from 1968 to 2011, found nearly all 10m
indices weighted by chance delivered vastly superior returns to the so-called
market cap approach where the percentage of a stock allocated to an index is
weighted according to a firm’s size.
“Nearly every one of the 10 million monkey fund mangers beat
the performance of the market cap weighted index….
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