After two years of operation, the participants in the club graduated and divided their spoils. The final accounting showed that the original $2,000 had grown to $2,125 for an annual rate of return of approximately 3 percent. This was far below the 10 percent rate of return for the stock market as a whole over the same period. How could such brilliant pickers underperform the market? The answer: transaction costs, pure and simple. These totaled $980, almost 50 percent of their original stake. The budding entrepreneurs had done more to fatten the coffers of the financial community than to
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