Final answer:
The performance of LMV Trust outperforming the S&P 500 for 15 years is not enough to dissuade a belief in efficient markets. The Efficient Market Hypothesis suggests that stock prices reflect all available information, making it difficult to consistently outperform the market. A single performance record is not conclusive evidence against efficient markets and a broader analysis is needed.
Step-by-step explanation:
While the performance of LMV Trust outperforming the S&P 500 for 15 years ending in 2005 may appear impressive, it is not sufficient to dissuade a belief in efficient markets. The Efficient Market Hypothesis suggests that stock prices reflect all available information, making it difficult to consistently outperform the market through active stock picking. Even though there are some investment advisers and funds that may outperform the market temporarily, the majority do not. This is supported by the fact that many mutual funds underperform the market average.
Furthermore, there are several factors to consider when interpreting performance records. The 15-year period of outperformance by LMV Trust could have been due to various factors such as luck, random chance, or a specific investment strategy that worked well during that particular time. It does not necessarily indicate a repeatable or sustainable strategy for consistently outperforming the market in the long run.
Therefore, to fully evaluate the efficiency of markets, one would need to analyze a larger sample of investment strategies and performance records under different market conditions. A single performance record, even if it spans multiple years, may not be sufficient to dissuade a belief in efficient markets.