In general, absent any inside information, an equity investor can expect to do better by holding a well-diversified, low-fee, passive index fund than by holding a few stocks.
Responses
Responses weighted by each expert's confidence
Participant | University | Vote | Confidence | Bio/Vote History |
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Philippe Aghion |
Harvard | Did Not Answer | Bio/Vote History | |
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
In the absence of inside information, on average a diversified strategy should do better unless the person has good judgment.
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Pol Antras |
Harvard | Bio/Vote History | ||
Unless the investor is a risk lover
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Richard Baldwin |
The Graduate Institute Geneva | Did Not Answer | Bio/Vote History | |
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Timothy J. Besley |
LSE | Did Not Answer | Bio/Vote History | |
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
This is a no brainer. The only qualification is that the diversified portfolio may not be exactly the market portfolio.
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
This is the prediction of our basic "no free lunch principle". All my savings are in index tracker, so i am living this view!
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Elena Carletti |
Bocconi | Bio/Vote History | ||
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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Xavier Freixas |
Barcelona GSE | Did Not Answer | Bio/Vote History | |
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
I agree with the statement as "doing better" is interpreted to mean
enjoying a higher average return for any given level of risk.
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Luis Garicano |
LSE | Bio/Vote History | ||
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Francesco Giavazzi |
Bocconi | Did Not Answer | Bio/Vote History | |
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
for a typical investor I strongly believe a passive, cheap index is better than a passive portfolio of a few stocks
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Martin Hellwig |
Max Planck Institute for Research on Collective Goods | Bio/Vote History | ||
The empirical evidence is overwhelming.
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
"Do better"understood to capture risk as well as expected return, of course.
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Henrik Kleven |
Princeton | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
A quant hedge fund may extract extra return by big data strategies, but an average guy, like myself, will likely fail with stock-picking.
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Per Krusell |
Stockholm University | Bio/Vote History | ||
I don't know of any convincing systematic evidence to the contrary.
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Botond Kőszegi |
Central European University | Bio/Vote History | ||
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
Lots of evidence. Few people consistently earn risk-adj. ret > index ret. And even then, much might be compensation for time & effort.
-see background information here |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Peter Neary |
Oxford | Bio/Vote History | ||
A small industry exists to help naive investors beat the market. It should be subject to mandatory health warnings.
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Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
A no-brainer.
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
I interpret "do better" in terms of a better risk-return tradeoff. Why take unnecessary idiosyncratic risk.
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Torsten Persson |
Stockholm University | Bio/Vote History | ||
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Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
Even if you get it right some of the time eventually you will get it wrong
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Richard Portes |
London Business School | Bio/Vote History | ||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
Assuming a degree of risk aversion. However some investors might rationally want some exposure to assets not available passively.
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
Just look at the long-term Warren Buffett bet against managed funds -- whenever there is outperformance, fees eat them up
-see background information here |
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Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Bio/Vote History | ||
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Karl Whelan |
University College Dublin | Bio/Vote History | ||
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Fabrizio Zilibotti |
Yale University | Bio/Vote History | ||
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