Monkeys May Judge Stocks Better Than The Pros, Study Suggests

In this photograph taken on March 23, 2013 an endangered orangutan is fed at a conservation centre located in the forest of J
In this photograph taken on March 23, 2013 an endangered orangutan is fed at a conservation centre located in the forest of Jantho district in Indonesia's Aceh province run by the non-government organization Sumatran Orangutan Conservation Program where orangutans rescued from residents and plantations undergo rehabilitation before they are reintroduced back into the wild. Experts believe there are about 50,000 to 60,000 of two species of orangutans left in the wild, 80 percent of them in Indonesia and the rest in Malaysia. They are faced with extinction from poaching and the rapid destruction of their forest habitat, mainly to create palm oil plantations. Indonesia is the world's biggest palm oil producer. AFP PHOTO / CHAIDEER MAHYUDDIN (Photo credit should read CHAIDEER MAHYUDDIN/AFP/Getty Images)

Next time you're looking for investment advice, you might be better off asking the monkey at your local zoo rather than a fund manager, a March study suggests.

Researchers at the Cass Business School at City University of London used a computer program to simulate the performance results of 10 million monkeys randomly picking the importance of a stock in an index. Then, using monthly U.S. share data from 1968 to 2011, the researchers compared the randomized results to the results from weighting stocks based on market capitalization indices (where the largest stock gets the biggest weight in the index).

Although no actual monkeys were used in the study, the researchers found that the "monkey" wins ... almost every time.

"Pretty much any fund manager tasked to replicate or benchmark themselves against a market cap-weighted index would have found themselves beaten by any one of our 10 million monkeys over the last 40 years," Cass researcher Andrew Clare wrote in an email to HuffPost.

Cass's discovery comes after a long line of research indicating that evaluating stocks is not so much a science as it may be a giant guessing game.

In January, it was reported that a cat named Orlando picked stocks with a higher investment return than an entire team of investment professionals. At the end of a year of research, the cat's stock picks had close to an 11 percent return, while the professionals only earned 3.5 percent.

And of course, we can't forget about the chimpanzee whose investment portfolio reportedly beat 94 percent of Russian bankers.



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