Picking stocks is a losers’ game
Research shows that many professional investment managers disappoint clients
WHAT’S the best way to achieve long-term financial goals? Searching for mispriced stocks and putting money in them? Finding a smart fund manager to do so? These approaches are popular, but research suggests this is a losers’ game.
Global financial markets process millions of trades worth hundreds of billions of dollars each day. The prices at which trades happen reflect the views of buyers and sellers around the world. Investors who attempt to outguess prices are pitting their knowledge against the collective wisdom of all market participants.
Dimensional Fund Advisors’ annual study of thousands of US-registered funds – which invest in stocks and bonds all over the world – illustrates how hard it is to beat that collective wisdom.
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