Yes, Virginia, You Can Beat the Market

September 2003
Journal of Financial Planning;Sep2003, Vol. 16 Issue 9, p22
Academic Journal
This article reports that financial planners generally are not the ones to encourage clients to try to beat the stock market because they believe most traders cannot, according to a paper written by three finance professors. Still, those same professors find that one in five traders can consistently beat the market. In a paper still undergoing academic comment, three professors from Harvard, Ohio State University and the University of Michigan studied 17,000 individual accounts at a major discount brokerage, each account having made trades on at least 2.5 different stocks over a six-year period. They found that as many as 20 percent exploited market inefficiencies and outperformed the market average, net of costs. The bad news, however, is that the market inefficiencies were created by a subset of investors who consistently under-performed the market.


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