MRU23.1: Video Activity: Should You Listen to the Expert Stock Pickers?

Which of the following is a passive mutual fund? -A fund that invests in a large number of assets without trying to pick winners and losers. -A fund in which the holdings change daily depending on market outcomes. -A fund that contains bonds only, without any shares of stock. -A fund that has a manager picking stocks and charging fees.

-A fund that invests in a large number of assets without trying to pick winners and losers.

What's wrong with attempting to invest only in the mutual funds that consistently beat the market? -The funds that beat the market become very expensive to buy. -The funds that beat the market are different every year. -It is impossible to tell which funds have beaten the market. -No funds ever beat the market.

-The funds that beat the market are different every year.

A mutual fund that has a manager picking stocks and charging fees is known as: -a passive mutual fund. -a manager fund. -a fee-bearing mutual fund. -an actively-managed mutual fund.

-an actively-managed mutual fund.

Mutual funds are portfolios of: -assets like stocks and bonds, managed by professionals. -bonds and other super-safe assets. -many shares of the same stock or bonds from the same corporation. -assets like stocks and bonds that are similar in value.

-assets like stocks and bonds, managed by professionals.

Most actively-managed mutual funds: -beat the market all the time. -perform just as well as the market almost all the time. -don't beat the market. -beat the market half the time.

-don't beat the market.

Professor Tabarrok describes a thought experiment about flipping a coin to predict market outcomes in order to demonstrate that: -since predicting the market is purely luck, no investors can beat the market several years in a row. -even if predicting the market is purely luck, we should expect a few investors to get lucky over and over again. -even if predicting the market is purely luck, that alone does not explain how some people appear to be experts. -since no luck is involved in being able to predict the market, those investors that beat the market must be geniuses.

-even if predicting the market is purely luck, we should expect a few investors to get lucky over and over again.

In recent years, Warren Buffett's investments: -have beaten the market about half the time, similar to other investments. -haven't done all that well, providing evidence that luck plays a role in successfully picking stocks. -haven't done all that well because he hasn't been actively managing them enough. -have been doing better and better, providing evidence that neither luck nor skill matters that much.

-haven't done all that well, providing evidence that luck plays a role in successfully picking stocks.

The claim that expert stock pickers don't do better than someone picking randomly was once tested by: -journalist John Stossel, who once made this claim in a book. -economist John Stossel, one of journalist Burton Malkiel's former students. -economist Burton Malkiel, who once made this claim in a book. -journalist John Stossel, one of economist Burton Malkiel's former students.

-journalist John Stossel, one of economist Burton Malkiel's former students.

According to Investment Rule #1, expert stock pickers: -should be ignored. -intentionally mislead you. -always give perfect advice. -are quite often, but not always, right.

-should be ignored.

Warren Buffett is: -the world's most successful investor. -an investor with more skill than luck. -a Nobel prize-winning economist. -someone who became rich through passive mutual funds.

-the world's most successful investor.