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http://moneywatch.bnet.com/investing/blog/wise-investing/how-do-you-beat-94-percent-of-mutual-funds-join-the-circus/1184/

How Do You Beat 94 Percent of Mutual Funds? Join the Circus

By Larry Swedroe
Jan 25, 2010

My colleague, Kevin Grogan at Buckingham Asset Management, passed
along an interesting article a few days ago. As reported in UK’s Daily
Mail, Moscow resident Lusha’s portfolio outperformed 94 percent of
Russia’s mutual funds. What makes this story interesting is that Lusha
doesn’t work for a large investment bank or brokerage firm and is not
paid a six-figure salary. Lusha is a chimpanzee, and her day job is
riding a scooter in the circus.

Lusha was given one million rubles to invest, a list of stocks to pick
from and was allowed to invest in eight different stocks. Pavel
Trunin, the head of monetary policy department at the Institute for
the Economy in Transition in Moscow said, “It shows that financial
knowledge does not play a great role in giving forecasts to how the
market will change.”

Of course, not everyone came to the same conclusion. One broker said,
“If the experiment had taken place a year earlier, the monkey would
not have had enough money to pay for her bananas.” If the broker is
arguing that Lusha’s stock picks were the result of luck rather than
skill, I would gladly agree that she was lucky. However, the broker
should then stipulate that any outperformance he demonstrates is also
likely the result of luck rather than skill.

We know it’s very difficult or impossible to discern the lucky from
the skilled when trying to select active managers. For Lusha’s sake, I
hope she diversified her “chimpanzee capital” and didn’t invest in any
circus or scooter companies.