Index Funds Advisors for Mobile Devices

Stock pickers are exactly what their name implies - active investors who pick stocks or even mutual funds based on perceived mismatches between the current market prices and their supposed true values. This is a major problem. In this random and efficient market, there are no mismatches between the current market prices and their true value. Stock pickers are listening to their feelings and instincts when deciding what stock to pick. A study in this Step reveals that the chances of the active manager beating the appropriate index are one in thirty-six, the same long shot as throwing snake eyes at the craps table! Less than three percent of managers even beat their proper benchmark. Unlike methodical index investors, active investors who try to stock pick are little more than gamblers who rely on raw emotion and their imagined ability to predict tomorrow's news. As Nobel Laureate Bill Sharpe asks, "why pay people to gamble with your money?" When investors pay high loads, commissions or fees to stock pickers, it may be more appropriate to refer to them as pocket pickers.