nytimes.com — Many mutual funds that make their trades based on the recommendations of a proprietary computer model, known as quantitative or quant funds, have outperformed their benchmarks in the last three years. And investors have noticed.
Jul 9, 2006 View in Crawl 4
settraJul 10, 2006
Wtf? Dupe!
alanspachJul 10, 2006
You dup people need to shut it already. just click the dup button
nadareJul 10, 2006
Most large mutual funds are like sheep following the flock where ever it goes.With billions or hundred of millions of dollars at their disposale is severly limits where they can invest the money. since they are some legal issues (where funds cannot in some circumstances legally own more then X percent of a company) and from their sheer size they usually end up investing in the same large cap companies. Sure you can take 50 million from some billion dollar fund, invest that in some smaller companies have a great return on the 50 million, but who has to answer for the poor return on the rest of the money ?Also why play into their game to begin with by trying to out smart them? The 'pros' can't even win at their own game, Don't bother. Save yourself the fees and just invest in an index fund because over the long term nothing beats the market.
rtwolfJul 10, 2006
Totally agree with you except three things:One, Warren Buffett has been beating the market for almost 40 years. There's a number of other people who have been beating the market for many years.Two, certain mechanical strategies have shown to beat the market over the long-term, including purchasing large handfuls of undervalued stock (look up value investing to find out what I mean, according to Benjamin Graham), dogs of the dow strategy and Joel Greenblatt's "Magic Forumla" from his book "The Little Book that Beats the Market."Third, if you have the time and patience, you may wish to learn more about value investing. It's hte only strategy shown to consistantly beat the market when applied properly. It essentially involves buying dollars for fifty cents. How's this possible, you might ask? Well, the stock market has some nooks and crannies where you can find stocks that no one wants to touch. I knew of a stock that had 9 dollars worth of cash per share and each share cost 6 dollars. In time, that 3 dollar difference will either be recognized by the stock market and the share price will rise or the company's directors may decide to return it to shareholders by dividends. Intelligent stock picking can be amazingly beneficial. Do you know what your profits would have been if you bought microsoft when it first came out and then sold it now, instead of taking a quick say 50-100% gain? You'd have many thousands of times the money now. Buy for the long-term and you won't have to beat Wall street at their game, you'll beat them with your own set of rules.I think that for most people, however, your best bet is to use an index fund and/or invest using the second method.
brewmastercJul 10, 2006
Good book on the subject:"My Life as a Quant" <a class="user" href="http://www.amazon.com/gp/product/0471394203/103-5719712-3476604?v=glance&n=283155">http://www.amazon.com/gp/product/0471394203/103-5719712-3476604?v=glance&n=283155</a>There is also a book about some guys in New Mexico using genetic algorithms to beat the street, but I can remember the name of the book offhand.