Shiller Says There Are No Genius Investors in the Long Run

While some investing approaches can work for long periods of time, over the long run, “without deep expertise, it makes little sense to veer much from a simple market portfolio—one that seeks to match the overall performance of the market, and not beat it.” This according to Yale professor Robert Shiller in a recent New York Times article.

Using the example of Warren Buffett’s investing prowess, Shiller underscores that investors who have attempted to mirror his strategy don’t “understand exactly how he makes his decisions, they don’t have his edge,” and, he adds, “must come to the party late and have frequently bid up prices as they compete against one another to buy the assets in his portfolio.” He also provides research study data that shows how the success of many investment strategies diminishes significantly once these strategies are made public.

Shiller concludes that investors should avoid blindly following strategies of so-called expert investors. “We need to exercise our intuitive judgement as well as rely on the wisdom of smart, well-informed people to decide whether to continue to rely on statistical indicators and investment strategies that seemed to work in the past.”