PT  - JOURNAL ARTICLE
AU  - Robert D Arnott
AU  - Noah Beck
AU  - Vitali Kalesnik
ED  - Goyal, Gauri
TI  - Practical Applications of Rip Van Winkle Indexing
AID  - 10.3905/pa.2016.3.3.138
DP  - 2016 Jan 31
TA  - Practical Applications
PG  - 1--5
VI  - 3
IP  - 3
4099  - https://pm-research.com/content/3/3/1.5.short
4100  - https://pm-research.com/content/3/3/1.5.full
AB  - Rip Van Winkle Indexing Robert D Arnott Noah Beck Vitali Kalesnik A new piece of research debunks the efficacy of the link between current price and market-cap weighting in stock selection, using a hypothetical “Rip Van Winkle” index portfolio based on stale, 20-year-old prices. When old Rip wakes up, he finds that his strategy outperforms a portfolio using current prices of the largest market-cap-weighted stocks.Co-authors Robert Arnott , Noah Beck and Vitali Kalesnik of Research Affiliates created this controlled experiment to provide a fresh perspective on the impact of prices on cap-weighted approaches, and find that such approaches come up short.“It’s another nail in the coffin of efficient market theory. You can ignore 20 years of information—and still outperform!” says Arnott.