In his classic 1973 book, A Random Walk Down Wall Street, Burton Malkiel states that "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".
The article by Research Affiliates highlighted that 100 random, equal-weighted 30-stock portfolios were pick out by monkeys. In summary, the 100 random portfolios outperformed the index by 1.60% per year, on average!
Paradoxes aside, if monkeys can outperform the index, why can't the average person?
Using the SPDR Straits Times Index ETF (ES3) as a benchmark, the performance of the ETF (including dividends) is 7.28% per year since its inception on 11 April 2002. Taking this benchmark into consideration, the goal of my portfolio is to generate an average annual return of 7% per year.
My strategy is to build wealth through both value and dividend growth stock investments. By incorporating both high quality dividend growth investments as well as value-oriented investments, I believe market-beating returns can be achieved (through patience and focus on quality at the right prices).
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