Any monkey can beat the market! That’s exactly how a headline of an article I recently came across reads.
This article was published in the Wall Street Journal in late 2012 (a tribesman recently shared it with me) and stated that if you give a monkey enough darts to throw at stock pages, they’ll beat the market. This was based on a research that simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the US stock market index by an average of 1.7% per year since 1964.
Now, that would have bought them a lot of bananas!
In fact, as early as 1973, Burton Malkiel, a professor at Princeton University had claimed in his book, A Random Walk Down Wall Street, that “A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.”
Now, given that the monkeys have not just earned as much as the US stock market index, but have handsomely outperformed it, there’s something worth pondering about for those who are trying to work hard to pick their own stocks.
Why care to analyze businesses and estimate intrinsic values when you can hire a monkey (or I will send one to you for a fee 🙂 ) to pick your stocks?
You must care, dear tribesman!