A Comedy of Errors: HuffPo’s Dan Solin Is Dead Wrong About This

That’s the historical performance though.

Insider Monkey’s aforementioned strategy will also have another year of spectacular performance. Through August 5^th, our picks returned 57.8% vs. 23.6% for the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).

The probability of this happening by pure coincidence is less than 5%. The combined probability of beating the market by 18 percentage points per year for 10 years, and then beating it by 34 percentage points for another year is now almost 1 in 5 billion.

Good luck finding 5 billion monkeys to throw darts!

Final thoughts

The truth is that markets aren’t that efficient after all, and the evidence is mounting to support this conclusion. Our strategy beat the market because hedge funds know how to dig for information that gives them an edge over sheepish index investors who blindly buy good and bad stocks.

After all, any fool has a 50% chance of beating the market. One in 2,000 monkeys can beat the market by a small margin for eleven years by chance.

What Mr. Solin doesn’t understand is that beating the market by a large margin isn’t as easy as beating the market by a small margin. Finding a couple thousand monkeys is easy. Finding 5 billion monkeys? Not so much.

Disclosure: none