The Myth of the Market Geniuses

A recent article in the Guardian attracted some attention: in a humorous kind of "experiment", market professionals, business students and a cat were pitted against each other to determine who would make the best decisions in the stock market throughout last year.

The cat won.

This may look surprising to some, but the same newspaper published another article a while ago, which was summarized by its author (David Schwartz) as follows: "I recently created a two-century long inflation-adjusted UK stock market index to resolve this critically important issue. Among the mass of information produced by this index, one fact emerged head and shoulders above all others. Investing in the stock market is not as profitable as the experts would have us believe".

Maybe it would also be opportune to recall the fate of Long-Term Capital Management, a company ran by economics luminaries, including two Nobel prize winners, which crashed down so hard that required a government bailout.

I always find it intriguing how the modern descendants of the entrails diviners, the "market analysts", show so much certainty in declaring the exact immediate specific "causes" of percentile fluctuations in stock exchanges all over the world.

Maybe the newscasts should start consulting some cats.


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