A Quote by Paul Samuelson
Perhaps there really are managers who can outperform the market consistently - logic would suggest that they exist. But they are remarkably well-hidden.
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I am one who believes that the market, properly incentivized, can consistently outperform government regulation on achieving objectives.
These results add up to perhaps the most important investment lesson of all that can be drawn from this week's market anniversaries: Predicting turns in the market is incredibly difficult to do consistently well. That means that, if your investment strategy going forward is dependent on your anticipating major market turning points, your chances of success are extremely low.
The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.
In the long run, a portfolio of well chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money-market account. In the long run, a portfolio of poorly chosen stocks won't outperform the money left under the mattress.
Favored stocks underperform the market, while out-of-favor companies outperform the market, but the reappraisal often happens slowly, even glacially.
The mistake managers often make is defining their industry too narrowly. Digital's market share in the minicomputer market stayed very robust even as it fell off the cliff. Disruption seems to come out of nowhere, but if you know what to look for, you can spot important developments well before the market does.
I have hidden my race for 22 books. I have hidden behind my married name, which is very Caucasian, because I didn't feel safe coming out with it. I didn't feel that the market would really accept me. I think I felt it's time to start bringing in an Asian-American point of view.
A lot of guys have better genes but if you work hard and consistently, you can outperform them.
Active investment is a zero-sum game. Passive managers don't play the game. They buy something resembling the market as a whole, or some segment of the market, and they don't respond to the actions of active managers.
If we are to have a stabilized market demand, selling pressure should be maintained . . . perhaps increased . . .at the first sign of a decline in business. I know of no single way business managers can do more to stabilize market demand than through greater stabilization of sales and advertising expenditures.
People would be a lot more skeptical if they understood that there is an incredible amount of chance in the results that you observe for active managers. So the distribution of outcomes is enormously wide - but that's exactly what you'd expect by chance with lots of active managers who hold imperfectly diversified portfolios. The really good portfolios contain a lot of really lucky picks, and the really bad portfolios contain a lot of really unlucky picks as well as some really bad ones.
The idea of demonstrating that this unknown something [God] exists, could scarcely suggest itself to Reason. For if God does not exist it would of course be impossible to prove it, and if he does exist it would be folly to attempt it.
If you're trading individual securities, you're almost certainly making a mistake. Because most professional managers can't outperform their benchmarks, and there's little reason to think that individuals can.
Fairy tales, because they have a very clear structure, are easier to interfere with. Also they have this really weird logic: the kind of logic that you only really experience when you're not feeling very well, or as a child.
Fairy tales, because they have a very clear structure, are easier to interfere with. Also they have this really weird logic: the kind of logic that you only really experience when youre not feeling very well, or as a child.
After taking risk into account, do more managers than you’d see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding 'no.'
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