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I think you are correct that the punters often think they have "unique insight" into the markets, and therefor place bets on that.  but the reality is that this information is almost certainly already known, and discounted into stock prices.  this forms the fundamental assumption of the "random walk" theory of the stock market, which has been verified many times over the years.

mutual funds on average perform worse than the overall market, mainly because they have to deduct their fees from the returns.  thus even producing "market returns" means you are actually lower than the market return by the fee--likely 1-3% per year.

I disagree with the last point of course and have explained more than once the rationale.  while there is certainly day to day speculation, the vast majority of trading in the public markets is long term investing, and I've given obvious examples of this in the past.

by wchurchill on Mon Mar 26th, 2007 at 04:44:39 PM EST
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