You have a large sum of money to invest and visit a customer
service (sales) representative at an internationally known brokerage
firm. He gives you a list of 50 stocks that the research
department of his firm recommends as future "winners". The
most sensible thing you could do at this point is
1. buy the 50 stocks he recommends because
this would be at worst a random selection and the diversification will
ensure a market return.
2. buy the 50 stocks he recommends because
you know that the firm's research department is highly rated.
3. give him a lecture on efficient markets
and leave.
4. ask him to see a plot of the market value
of the 50 stock portfolio for the past 20 years along with the market
values of well-known market indexes like the TSX300.
Choose the correct option.