To Become a Better Investor, Think Like Darwin

The conventional wisdom of how most of us should invest our money is clear—avoid paying high fees to money managers for their supposed stock-picking expertise. In fact, steer clear of single stocks altogether, and simply buy “the market,” meaning an exchange-traded or mutual fund that passively tracks the performance of the entire stock market. And, maybe most important, focus on the long run, by holding investments through their ups and downs rather than trying to time the market by buying low and selling high—too tricky to do, say the experts.

This is good advice, as far as it goes. (And, for what it’s worth, I follow it myself, mostly.) On the other hand, a big pillar supporting it is the “efficient markets hypothesis,” economist-speak for the assumption that the prices of tradable assets like stocks, bonds, and commodities respond immediately and appropriately to new information, an assumption that depends on market