Step 3: Stock Pickers in Under a Minute

Mark Hebner discusses how the financial press largely focuses on forecasts and the daily movements of stocks and market indexes, showering rewards on those who have been lucky enough to be in the right place at the right time. But it is virtually impossible for a stock picking fund manager or individual stock picking investor to consistently predict and invest in the stocks that will have the highest returns in the future. This difficulty is based on the tenets of market efficiency, which states that prices reflect all available information. Stock pickers tend to be overly confident in their "skill" to generate above benchmark returns, but studies have shown that their "winning performance" is primarily due to luck, not skill.

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