28 Aug 2014

Word on the Street - Monkey Portfolio

Have you heard of the proverbial Monkey Portfolio. Surprisingly, it was an experiment conducted in the US using a monkey. A monkey was asked to throw darts at random on the prices page of the Wall Street Journal and a portfolio was created by including all the stocks on which the monkey's darts fell. The collection of stocks became known as the Monkey portfolio.

What was more surprising was that when the performance of the Monkey Portfolio was compared with the performance of fund managers in the US, the Monkey Portfolio actually outperformed more than 85% of the US fund managers apart from beating the major indices in the US. What are the issues that arise from this experiment and what do they mean to an investor trying to selecting a portfolio management. 

Here's an interesting read on "Why a monkey throwing darts could boost your returns?"

Read more at http://www.forbes.com/sites/davidmarotta/2014/08/06/why-a-monkey-throwing-darts-could-boost-your-returns/

This word is suggested by Vinita Jagannathan (PGDM 2013-15)

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