The Financial experts Good, Bad and Worse

The last two post were on forecasting the markets, so I decided let me continue on forecasting. The Atlantic blogpublished a challenging article on the decision-making abilities of financial experts sometimes back, I like the arguments and the study outcomes are not surprising to me 😉

There are experts, and then there’s everybody else. In finance, experts have studied the subject and follow the markets closely, so you’d expect that they’d be superior at betting on the stock market as well as on other financial matters, right? Well, perhaps not so much. As the psychologist Philip Tetlock—who did a 20-year study on the subject—famously said:

Experts are poorer at predictions than dart-throwing monkeys. Study after study has shown that low-cost index funds—investments that track major financial market indices—outperform “actively managed” mutual funds. Continue reading “The Financial experts Good, Bad and Worse”