Historically, consumer staples have much better risk-adjusted returns than any other sector. Buying and holding these stocks will beat active management and the S&P 500.
Active management, despite their access to expensive Bloomberg terminals and other financial resources, by in large, are just as clueless as retail investors, but they have more money and make up the difference in fees.
What does this prove? The fact that billionaires and hedge fund mangers – who have access unlimited data, who can buyout seats on the board of directors, and can even influence the news – are unable to beat the market but instead underperform it substantially, douses cold water on the popular belief that the markets are rigged, inefficient, or a scam. The biggest scam are these firms charging high fees for poor performance, but the market itself is not broken.
Instead, the market has become more efficient than ever, benefiting index buyers and hurting those who think the are the next Warren Buffet.
Your points are contradictory. If consumer staples regularly outperform other market sectors, markets can't possibly be efficient. If they were, there would no signal to extract from the noise.
The whole idea that markets are "efficient" is specious nonsense anyway. If they were, they'd simply be a perfect random number generator.
In fact billionaires do regularly outperform the market. Bill Gates has made far more money from investing than he did from Microsoft.
and some billionaire fortunes have been lost; in the end, you get the overall market performance. Maybe there is some excess. It would be interesting if there were a study about if stocks of companies by Forbes 400 members outperform stocks which don't have members.
I said more efficient than ever. That doesn't mean 100% efficiency.
Active management, despite their access to expensive Bloomberg terminals and other financial resources, by in large, are just as clueless as retail investors, but they have more money and make up the difference in fees.
What does this prove? The fact that billionaires and hedge fund mangers – who have access unlimited data, who can buyout seats on the board of directors, and can even influence the news – are unable to beat the market but instead underperform it substantially, douses cold water on the popular belief that the markets are rigged, inefficient, or a scam. The biggest scam are these firms charging high fees for poor performance, but the market itself is not broken.
Instead, the market has become more efficient than ever, benefiting index buyers and hurting those who think the are the next Warren Buffet.