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reddingrunner (92.97)

The Odds Are Against Us



March 21, 2013 – Comments (3)


"My friends at Longboard Asset Management completed a study called The Capitalism Distribution that examined stock returns from the top 3000 stocks from 1983-2007.  They found that:

-39% of stocks were unprofitable investments.

-19% of stocks lost at least 75% of their value.

-64% of stocks underperformed the index.

-25% of stocks were responsible for all the market’s gains.

Simply picking a stock out of a hat means you have a 64% chance of underperforming a basic  index fund, and roughly a 40% chance of losing money!"

3 Comments – Post Your Own

#1) On March 21, 2013 at 7:20 PM, robotclo (78.69) wrote:

40% chance of losing money.

24% chance of gaining money, but less than the index.

36% chance of beating the index.

Am I doing the math right?  Those actually seem like pretty good odds to me.  And those results come from just picking stocks at random; doing due dilligence should increase your chances.

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#2) On March 22, 2013 at 12:46 PM, reddingrunner (92.97) wrote:

Slightly better than 1 in 3 chance that a stock picker can beat an indexer.  "Due diligence" only improves your odds if you can outsmart the big boys with their advanced degrees, large staffs, complex computer programs and direct access to corporate management. When you buy a stock, odds are you are buying from them and they think it's time to sell, and when you sell a stock, one of them is buying it from you because they think the opposite about it's future as you do.  But yes, if you index, the odds are you will do very well over time.

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#3) On March 22, 2013 at 4:18 PM, L0RDZ (88.00) wrote:

So  your  saying  I  still  have a  chance...

From  dumb  and  dumber....


YEAH  !!!!!!!!!!!!!!!!!!!


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