3.4.4 Can investors really beat the market?
To conclude the debate about whether we have the capability to predict future movements in shares and other assets, hear what some financial experts have to say on the matter.
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Transcript
COMMENTARY
The thought that we can out-guess others or even the market - hubris - plays a part in the creation of all bubbles.
JAMES MONTIER
We have these delusions of our own abilities and those really do feed bubbles, because bubbles at heart are all about over-optimism.
LARRY ELLIOT
People just do assume that they have discovered the one little secret that will actually make what went wrong last time, right this time. It’s a bit like a golfer who goes out there and shoots 90 but thinks actually, there’s one little thing I do to my swing will turn me into Tiger Woods.
And all I really need to do is just tweak a few things and we’ll get things absolutely right. And that’s what people think in the markets.
HOWARD DAVIES
Don’t think that you can regulate away optimism and animal spirits, if you like, and that I think is almost bound to mean that there will be, from time to time, some overshooting on the upside and some overshooting on the downside.
JAMES MONTIER
The four most dangerous words in investing are “This time it’s different” and it never is.
LARRY ELLIOT
People forget. They know that there has been massive boom bust. They know there have been gigantic speculative bubbles. People forget.
MARTIN UPTON
Can fund managers consistently beat the market?
ANTHONY NUTT
Well the record would suggest not, but depending on your time horizons, if the question is, can they beat the market year after year after year after year, it’s unlikely because the market goes through phases of sentiment. Which a long term investor will tend to ignore, and a wise investor would tend to ignore quite frankly, but over the long period of time there are some very significant and many of them, examples of fund managers that have beaten the market.
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