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NerdWallet's Smart Money Podcast

Learn How Random Investments Can Outperform Managed Funds

May 29, 2024
Wall Street Journal columnist Spencer Jakab discusses how randomly selecting individual stocks can outperform expert investing strategies in a dart-throwing experiment. The podcast explores the benefits of low-cost index funds over expensive investment managers and offers insights on portfolio diversification, economic well-being, and the pitfalls of frequent market adjustments.
18:17

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Random stock picks can outperform expert investing strategies, highlighting the potential of simple index funds and ETFs.
  • Low-cost index funds are recommended over expensive investment managers, emphasizing the advantages of maintaining a diversified portfolio.

Deep dives

Experiment with Darts and Stock Tickers

A Wall Street Journal columnist conducted an experiment involving throwing darts at stock tickers to determine investment choices. The experiment involved choosing stocks randomly from pages of stock listings from Barron’s. The darts indicated whether to buy long or sell short, mimicking a high-profile investment conference. Despite excellent overall performance, it was conducted as a virtual portfolio due to restrictions on individual stock investments.

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