Individuals Can Beat the Market – the Study
Posted on | March 12, 2010 | No Comments
Nod to Miguel at Simoleon Sense for pointing the way to the empirical research paper Can Individual Investors Beat the Market? by Coval. Hirshliefer, and Shumway (2005).
Individuals, even small investors, beating the market is what this site is all about. This study points out that previous studies showing that individual investors underperform the market, are misleading. It demonstrated that SOME individual investors can consistently out perform the market and their investing peers. It did not test specific strategies, just that some investors could outperform the worst performing investors by 8%.
While I could quibble about some aspects of this paper, why bother, it gives credence to an important notion, that it is worthwhile for an individual to attempt to get market beating returns through individual effort.
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