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How A Monkey Outperformed Money Managers
Why being a Money Manager is Simple
What would you think if someone told you that they are a fund/money manager? Now what if I told you that I monkey could replace their job?
To start this story, we have to travel all the way back to 1973. This is back when (unsurprisingly) people used to read the newspaper, and each newspaper would report pages about stocks.
A professor at Princeton University, Burton Malkiel, had released the now-bestseller book called “A Random Walk Down Wall Street.” One of the most iconic lines in the book reads, “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.”
This in itself is an extremely bold claim, considering that the stock market is known to be hard to master, and those who are successful are treated like legends.
The claim, however, was taken literally in another sense. A company named “Research Affiliates” ran a test where they created 100 random stock portfolio’s, each holding 30 different assets. The stocks were chosen from a sample size of 1000 stocks.
