Even a Monkey Could Pick Stocks

Adam MonkSlovak economic newspaper Hospodarske noviny published my article several days ago on its web page. Although the article is in Slovak, it is based on an article from the Chicago Sun Times. The journalists at Sun Times selected in 2003 a monkey that picked each year five stocks for them. At the end of each year they evaluated their performance.

I managed to get Adam’s (name of the monkey is Adam Monk) results for every year into 2008. Out of the six years, Adam outperformed the S&P 500 four times. Likewise, he beat four times the renowned US fund manager Bill Miller of Legg Mason Value Trust.

This is evidence for me that the stock market returns are random. If there were any rules how to safely beat the market, I am pretty confident that everybody would be able to beat Adam not to mention Bill Miller. Since the market returns are random even a monkey can beat anybody, even Bill Miller several years in a row.

I am sure no monkey could beat the chess world champion Viswanathan Anand four times out of six matches as chess is not based on probability or randomness but rather on talent, skill and hard training. We can be beaten by monkeys only in disciplines which are based on randomness, e.g. roulette, flipping coins, betting etc.


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