Learn How Random Investments Can Outperform Managed Funds

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2 • 665 Ratings

🗓️ 29 May 2024

⏱️ 18 minutes

🔗️ Recording | iTunes | RSS

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Summary

Learn why randomly choosing individual stocks can beat expert investing strategies — and what that means for your portfolio. Can random stock picks outperform Wall Street professionals? What kind of portfolio returns can low-cost index investing drive? Hosts Sean Pyles and Anna Helhoski delve into the astonishing results of a dart-throwing experiment by Wall Street Journal columnist Spencer Jakab and his team, which pitted random stock selections against high-profile hedge fund picks. The hosts explore this intriguing setup and its outcomes, offering actionable insights into the power of simple, low-cost index funds and ETFs over expensive investment managers. Their insights are intended to offer a better understanding of the practicality of low-cost index funds, the importance of maintaining a diversified portfolio, and the pitfalls of frequent market adjustments. Then, Sean and Anna delve into the latest financial headlines, including findings from the Federal Reserve's Economic Well-Being of US Households report for 2023, April’s drop in home sales, and Google Flights adding Southwest Airlines fares to its search results. In their conversation, the Nerds discuss: index funds, investment strategies, stock market, ETFs, dart-throwing experiment, investing tips, low-cost investing, financial wellbeing, active vs. passive investing, hedge funds, portfolio diversification, The Wall Street Journal, stock picks, investment success, random stock selection, economic well-being, smarter investing, outperforming the pros, investment managers, A Random Walk Down Wall Street by Burton Malkiel, stock listings, mutual funds, stock performance, financial journalists, retirement savings, financial stress, household income, emergency expenses, high mortgage rates, affordable housing, home sales, previously owned homes, Google Flights, Southwest Airlines, travel expenses, airfare comparison, financial education, money management, financial planning, investment portfolio, stock market analysis, market adjustments, investment risks, and diversification benefits. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Prime Video brings thrilling entertainment.
0:03.0	Watch Heavyweight Detective Breacher, Season 3 included with Prime.
0:07.0	Exactly how much danger is this job putting me in.
0:10.0	Treat yourself to the lovably chaotic Bridget Jones mad about the boy available to buy.
0:15.0	Did you have sex? Did you have sex?
0:17.0	Did you have sex last night?
0:19.0	Yes! And it was amazing.
0:23.0	Whatever you're into, it's right here.
0:25.3	Prime Video.
0:27.1	Click or tap the banner to find out more.
0:31.1	Welcome to NerdWallets Smart Money Podcast.
0:33.7	I'm Sean Piles.
0:34.8	And I'm On a Hill Hoski.
0:36.3	And this is our weekly Money News Roundup, where we break down the latest in the world of finance
0:40.6	to help you be smarter with your money.
0:42.3	We'll go deep into a single topic and then leave you with the latest money headlines.
0:46.5	Today, we're talking about another proof point for a very basic investing.
0:50.8	Yes, we're hearing from a Wall Street Journal columnist about an experiment that makes the case for using simple investments like index funds, ETFs, and the like, instead of pricey investment managers.
1:02.1	In fact, you could just throw a dart.
1:04.1	Oh, so we're going to a bar?
1:05.8	Uh, no. These darts don't have a bullseye. They're random. So let's hear from Spencer Jacob. He's a hurt on
1:11.5	street columnist for the journal. Spencer Jacob, welcome to Smart Money. Thanks for having me.
	...

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