On the Forbes website today there is an article about some new research about to be published by Research Affiliates. It involved making up 100 random portfolios of 30 shares from the top 1000 shares every year from 1964-2011. It then compared the performance of these portfolios with the index. It claims that 98 our of 100 of these portfolios beat the market.
Although I have seen consistent out-performance of monkeys vs the index and professionals, the size of this out-performance seems slightly incredulous. I fear that they may not not have used survivorship bias free back data for this simulation. I await the full report from Research Affiliates to see.
The plan for my next book is beginning to take shape. It is all about inflation. The fuse for a potential time-bomb of inflation has now been lit by central bankers across the world. Within a decade, 5%-10% inflation is likely to return and have a major impact on society and (more importantly) your wealth.
The book is going to examine in layman’s terms what is inflation is, what causes it, why we have difficulty understanding it, the tricks governments get up to with it, and how it is going to change your life in the future.
If you have any views on the subject, please let me know and I’ll do my best to include them.
Looking forward to hearing from you.
Pete is talking about his book to students at the BBP Business School on 3rd December 2012 at 5.30pm. The title of the talk is: “Why a monkey thinks your returns from investing may be less than you expect.”
A copy of his PowerPoint slides can be found here: BPP talk 3 Dec 2012.