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The markets can be outperformed - if you know where to look

Dow Jones
Credit: Reuters

The same information is instantly available to everyone. High-speed trading algorithms arbitrate away every investment opportunity in nanoseconds. Companies are so well researched that there is nothing to know that is not already in the price. In the last couple of decades, many investors have come to accept that the markets are always perfectly efficient – and the only rational response is to buy a low-cost index fund.

That might have been true 10 or 20 years ago. But there are now signs things are changing. In fact, there are three reasons why even private investors might be able to beat the market once again.

Author Michael Lewis's book Flash Boys lifted the lid on high-speed computer-driven trading

Such as? The number of analysts has declined so dramatically that lots of companies are hardly researched at all. The rise of passive, tracker funds means that lots of opportunities simply get ignored. And the gradual withdrawal of central banks' support from equities means there will...

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