Because it captures geo-location data from both check-ins and visits through its apps, Foursquare was able to extrapolate foot-traffic stats that turned out to be very accurate predictors of financial performance. As just about everything in our lives is getting sensed and captured by technology, financial services firms have been turning their attention to startups, with the hope of mining their data to extract the type of gold nuggets that will enable them to beat the market.
The question remains, can a regular investor like us really beat the market? Do we have what it takes to win over the middlemen and institutions that have millions or even billions invested in the market? Sarna author of "History Of Greed," explains it this way, "We all have some larceny in us.
While many people in the financial industry have insider information which they cannot legally trade on, they also possess the necessary financial statement analysis skills to develop a greater insight about a given company. Robert Laura, author of "Naked Retirement: I think the market can be beaten, but even a broken clock is right twice a day.
Best way to describe it: He says the common investor uses mutual fundsare stuck in k plans which essentially track the broader indexand pay higher fees as compared to stock, index funds or ETF s.
As he puts it, "investors are set-up to fail from the get-go.
The good thing is many more investors are taking responsibility and interest in their investments. They are taking the initiative to learn how their investments work and are less intimidated.
He adds, "The advent of ETFs and Index investing allow people to mimic the market, instead of trying to beat itwhich is a better, less expensive perspective to have. Tresidder, said in "All the evidence supports the disappointing fact that regular investors as a whole underperform the market.
In other words, regular investors have one competitive advantage - liquidity. Systematic risk management can work to provide regular investors with similar or slightly improved investment performance relative to the market at substantially less risk," he says.
Helping the Odds What can an investor do to increase their chances of "beating" the market? Laura says there are several things: The best way to make money is to save money.
Establish and follow a discipline which translates into just doing what you said you are going to do. Give every investment in your portfolio a buy price, hold price and sell price along with one or two reasons to buy, hold or sell at that value. This gives you specific criteria to act and provides your portfolio with purpose and specific direction.
Watch for headline risk. Set up email alerts for your investments so as new information comes out about them, you are aware of it in the early stages to consider changes.
Mark your calendar for things to watch like earning dates, intellectual property timelines and industry reports like Federal Reserve meetings, unemployment numbers, new housing starts and other information that will affect the specific sector or security.
Sarna suggests investing in what you know and understand, such as solid, profitable small-caps and even microcaps in niches you can monitor and understand. These can appreciate much more rapidly than equivalently-priced large-caps.
The only way to get above market returns is to develop a competitive advantage says Tresidder. The Bottom Line The debate of whether an individual investor can beat the market is as old as the stock market itself.
Those who have found fortune investing will often preach that they possess superior analytical skills which allowed them to predict the market. Those investors who suffer losses will tell a much different tale.
Trading Center Want to learn how to invest? Get a free 10 week email series that will teach you how to start investing. Delivered twice a week, straight to your inbox.Find the latest business news on Wall Street, jobs and the economy, the housing market, personal finance and money investments and much more on ABC News.
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Using the comprehensive insider trading data in the U.S.
between and , we –nd that corporate insiders as a group have an average raw trading alpha of cents for purchases and cents for sales, both of which are reliably positive. Psionics are mystical powers of the human mind that always seem to be absent when tested for in a research lab.
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