Answer: 67%

Questions:

• Why do you think most finance professors, who likely know more about investing than the general public, invest this way?
• Do you think it is hard to pick stocks that will do "better than the market?" Why or why not?
• This study was conducted in 2010. How do you think professor's investing behavior might have changed since then? 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (from research report "Confidence, opinions of market efficiency, and investment behavior of finance professors")

Employing a survey distributed to over 4,000 professors, we obtain four main results. First, most professors believe the market is weak to semi-strong efficient. Second, twice as many professors passively invest than actively invest. Third, our respondents' perceptions regarding market efficiency are almost entirely unrelated to their trading behavior. Fourth, the investment objectives of professors are, instead, largely driven by the same behavioral factor as for amateur investors-one's confidence in his own abilities to beat the market, independent of his opinion of market efficiency.

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Let your students try to "beat the market" using this stock market simulation (and activity) that will take....less than 2 minutes to play!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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