By Felicity Duncan
In a very depressing study, researchers at the University of Chicago found that investors may fail to beat the market even when they follow a proven investment strategy for as long as ten years. The researchers modelled the returns investors would earn using proven strategies like value investing over long time periods and found that even if investors stuck to their guns for years, market volatility and timing could still mean that they perform worse than the market overall.
There are a couple of lessons here. The first is that, even for disciplined investors with a good strategy, market timing and volatility matter. The second is that passive investment gurus do have a point: in the long term, it’s very hard to reliably beat the market. The third is that when it comes to investing, time is key. The longer investors stuck to their strategies, the better they did (although there was always a chance of losing out).
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In Premium today, you can read the truly thrilling story of how BHP derailed a runaway train. You can also learn the truth behind Tesla’s record quarter as analysts dig into its results.
