Len:
I have no doubt that insiders have beaten the market averages by a huge amount. They take virtually no risk when they grant themselves options and then cash those in only after the stock price goes up enough to give them a guaranteed return. I would love to see the practice of granting stock options made illegal, at least over a certain threshold. If insiders of public companies want to participate in the growth of their own successes, then they should go out and buy stock on the open market like all the rest of us!
But, it does seem to me that the insiders would drag down the rate of return of the overall stock market averages as well. The cheap shares that the insiders acquire dilute the equity interest of all the stockholders.
No doubt, people who trade on inside information are big winners. Of course, being illegal, their risk is substantially higher as well (jailtime, fines, or fired if caught).
I'm not sure about hedge funds. I haven't seen any numbers of what their average returns are relative to the market. But aren't they a relatively recent phenomenon, at least in large #s?
Bottom line, I agree with you that other than the above and value investors (from Warren Buffet to the microcappers), I can't think of any other major group that has managed to beat the market averages.
