Final answer:
In an efficient market, it is unlikely that any investor, including those choosing stocks by throwing darts at a list, would achieve superior returns over time. The efficient market hypothesis suggests that all available information is already reflected in stock prices, making it impossible to consistently outguess the market.
Step-by-step explanation:
If markets are efficient, no investor, whether choosing stocks based on analytical forecasts, expert advice, or by throwing darts at a list of stocks, is expected to achieve superior returns over time compared to the overall market. This principle stems from the efficient market hypothesis (EMH), which suggests that all known information about investment assets, such as stocks, is already factored into the prices of those assets. Therefore, no amount of analysis can give an investor an edge over other market participants. In an efficient market, every stock's price reflects its true value, making it impossible to purchase undervalued stocks or sell stocks for inflated prices. As historical data indicates, most professional fund managers and financial investors who attempt to outguess the market fail to do so consistently over the long run.
Trying to pick stocks that will outperform based on their supposed future gains is a high-risk approach that doesn't guarantee success and is unlikely to result in significant wealth accumulation. This is corroborated by the fact that many mutual funds fail to outperform the market average. As such, the assumption that any investor, regardless of their strategy, could systematically achieve superior returns in an efficient market is fundamentally flawed. Instead of attempting to pick winners, diversifying one's portfolio and investing in low-cost index funds that track the market are considered more reliable strategies for wealth growth over time.