Send Out the Clowns

"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 the experts."

--Burton Malkiel, A Random Walk Down Wall Street, 1974

 

It was bound to happen--again. In Russia of all places, a chimp outperformed nearly all of Russia’s investment funds with her stock picks, according to an article in UK’s Daily Mail.

Lusha, a scooter-riding chimp for the Moscow circus had about £21,000 to invest. She was given a list of stocks from which to pick and eight cubes, which she was instructed to place next to her selections, according to Mail.

At the end of the term, Lusha’s picks had nearly tripled in value and she had outperformed a whopping 94% of Russia’s fund managers. Her stellar results prompted the Russian media to report that “Lusha made all serious analysts look like clowns.”

Lusha received such broad attention that the head of Russia’s department on monetary policy proclaimed the results show “that financial knowledge does not play a great role in giving forecasts to how the market will change.”

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One anonymous broker asserted that Lusha might have been just lucky. He was reported as saying, “'If the experiment had taken place a year earlier, the monkey would not have had enough money to pay for her bananas.” Ironically, this broker's observation closely mirrors IFA's well-documented assertion about lucky managers and their inability to consistently deliver above benchmark returns. (Click on the monkey on the left and hear the same story)

In any case, Lusha's exemplary performance should be lauded, and it will most certainly prompt Morningstar to assign manager ratings to primates. For IFA's part, we'd give her a 5-banana rating.
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