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You have discovered an investment strategy that can beat the market by 300 basis points per year.

Assume the stock market is expected to return 9% per annum. Unfortunately, to implement your strategy, you will have to turn over your portfolio three times a year.

Think of this as rebalancing (selling and purchasing) 25% of your portfolio every month. You have very good traders, who can execute trades at a cost of only 7.5 cents per transaction (15 cents round-trip) on a $30 stock. Does this strategy make sense?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91991447

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