Background

In 1973 Princeton University professor Burton Malkiel said,

A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.

1512 In 1990 the Wall Street Journal* took Burton up on his challenge. They ran this challenge until 2002 and pitted random dart throwing selections to expert picks. We have the data through 1998. Let’s see how the Monkeys performed.

Your task

Our client believes the ‘monkey dart throwing’ hypothesis. He would like us to perform an analysis of the data using statistics and your own research to help his company that advocates the use of low-cost index funds. Your short report should visualize the data, perform the appropriate statistical analysis, and give your client actionable results that help him with his company.

Suggestions

  • You will need to check your assumptions for the statistical method that you choose. These checks should be included in an appendix or ‘extra information’ slides.
  • You might need to provide a short sentence about the statistical method to get your client to understand it.
  • Your main report/presentation should have graphics and numerical conclusions (think confidence intervals) to help your client understand.