From: gts (gts_2000@yahoo.com)
Date: Fri Jun 13 2003 - 11:05:42 MDT
Rafal Smigrodzki wrote:
> To claim that the current stock price is the best predictor
> of the future would imply that averaged means-weighed
> judgment is always superior to individual judgment (no matter
> how well informed).
That is exactly what I'm saying, Rafal. There is no evidence that market
skill actually exists. The only exception is insider trading. It illegal to
profit from being "well informed."
There are of course people who have outperformed the market for long
periods, like Warren Buffet and Peter Lynch (before he retired as the
manager of fidelity magellan) but the statistics that describe the world of
money management show that no more people like this exist than can be
expected by chance alone.
1) Mutual fund managers who outperform the market in year y are no more
likely to outperform in year y+1 than those who underperformed in year y.
And
2) The number of managers who manage to outperform in consecutive years y
through y+n is exactly what would be expected if all mutual funds were
managed by lower primates.
-gts
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