Monday, March 23, 2015

Coffee Break: Beating the Market

Jim Parker's Interesting Links from the Web
Many investment gurus say they can 'beat' the market. But do they do it consistently, what risks are involved and what’s the result after costs?
In this week’s Coffee Break, we feature articles showing that investors are better off starting with the aim of getting the capital market rate of return.
Beating the Market
Some fund managers will always beat benchmarks in any year. But how many do it consistently? And when they do, how much is due to skill or plain good luck? A new survey, published in the NY Times, asks those questions.
Mission Impossible
Even Warren Buffett admits he doesn’t beat the market all the time. If he did, he would eventually “become” the market. This study shows the arithmetic behind the idea that no investor can outperform the market forever.
Never a Stock Picker’s Market
‘Alpha’ is the extra return an investor gets over a benchmark due to skill. The problem, says Noah Smith, is that what is identified as ‘alpha’ is often just ‘beta’ or the return the market would have given you anyway.

Jim Parker is a Vice President at DFA Australia Limited.