Why picking stocks is only slightly better than playing the lottery


PLUS a new index study and 6-month and 15-year returns for DFA and Vanguard
Paul’s MarketWatch.com article, “Why picking stocks is only slightly better than playing the lottery” has such a provocative title that he was not surprised to get a lot of responses. Because the title was intended tongue-in-cheek, he was surprised how many took it seriously. But there was much to learn about investors’ beliefs in those responses. (see original article and comments here).
In the first part of this podcast (up to minute 45:08) Paul reviews the Bessembinder Study  “Do Stocks Outperform T-Bills?” so investors understand why this research is important. Then he responds to many of the more interesting comments regarding the article. The podcast continues with a review of the first 6-month and 15-year performance for DFA and Vanguard funds that represent the asset classes Paul thinks equity investors should own. He also discusses the returns of the average fund in each asset class and why those numbers are misleading.