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Should You Hire a Blindfolded Monkey
Burton Malkiel once said, “A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.”
Rob Arnott countered Malkiel with “The monkeys have done a much better job than both the experts […]
This is not to suggest that you should hire a monkey to pick your investment portfolio. But, you would do well not to follow the advice of the so called experts.
In fact, your best strategy might be the George Costanza approach - go opposite. This is what I call the “Inverse Cramer” strategy. (see Twitter user @CramerTracker) The probability is that this strategy will more than likely work out better than listening to anything these Nostradamus’s are predicting or forecasting.
One only has to look at Cathie Wood and her ARKK fund. In July 29, 2021 she doubled down on stocks Teladoc, Spotify and Shopify:
July 29, 2021
“Both ARKK and ARKW bought the shares in Spotify on Wednesday. No other ETF has stakes in Spotify. Together, the two ETFs held about 4.12 million shares, worth about $978.38 million, in Spotify ahead of Wednesday's trade.” (Source: Benziga)
Fast forward to October 2022:
Imagine if you followed her lead regarding ARKK and Spotify and purchased $10k of ARKK or even Spotify stock in August of 2021—you would reaching for the rolaids or Early Times bourbon—
Talk about Investor PTSD.
A simple winning investment strategy is to “consistently buy an S&P 500 low-cost index fund. Keep buying it through thick and thin, especially through thin.” (Warren Buffett)
For all those stock pickers, prognosticators, forecasters, crystball-gazing fund managers - I leave you with that great philospher Ace Ventura.