Fiona Harris, client portfolio manager in the US equities team at J.P. Morgan Asset Management, explains how to outsmart the world's largest stock market.
The US stock market is often described as the ‘world’s most efficient market’. The label refers to a tenet of portfolio theory called the ‘efficient markets hypothesis’, which states in an efficient market, share prices always fully reflect all the information available. Therefore, a truly efficient market would be extremely hard to outperform. While the idea of efficient markets may be up for debate, given the involvement in markets of human frailties such as greed and fear, evidence remains that it is not easy for a fund manager to beat the S&P 500, the main US stock index. Figures ...
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