QoD: Over recent 20yr period, what % of investing pros beat the mkt?

Answer: 93% of investment pros underperformed so only 7% “beat the market”

Note: The S&P 500 consists of the largest publicly traded U.S. corporations, ranked based on their market capitalization. What’s the S&P 500? is an NGPF Investing activity that uses the FinViz visualization to help students make sense of this index. 

Questions:

• Why do you think investing professionals struggle to “beat the market?”
• Why do you think investors continue to invest their money with professionals despite their record of not being able to “beat the market” over the long term?
• Your friend says “you are better off investing with professionals instead of buying a simple index fund (e.g., S&P 500) that only matches the market return.” Do you agree or disagree?

Click here for the ready-to-go slides for this Question of the Day that you can use with your students.

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Behind the numbers (SPIVA report, 2023):

A UNIQUE SCORECARD FOR THE ACTIVE VERSUS PASSIVE DEBATE There is nothing novel about the index versus active debate. It has been a contentious subject for decades, and there are a few strong believers on both sides, with the vast majority of market participants falling somewhere in between. Since its first publication in 2002, the SPIVA Scorecard has served as the de facto scorekeeper of the active versus passive debate. When headline numbers have deviated from their beliefs, we have heard passionate arguments from both camps.

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Teach students about index funds with the most popular game in the NGPF Arcade, STAX. 

About
the Author

Dave Martin

Dave joins NGPF with 15 years of teaching experience in math and computer science. After joining the New York City Teaching Fellows program and earning a Master’s degree in Education from Pace University, his teaching career has taken him to New York, New Jersey and a summer in the north of Ghana. Dave firmly believes that financial literacy is vital to creating well-rounded students that are prepared for a complex and highly competitive world. During what free time two young daughters will allow, Dave enjoys video games, Dungeons & Dragons, cooking, gardening, and taking naps.