Active managers are paid to add value over what can be earned at low cost from passive investing, and failure to do that is failure.
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If you cannot look inside yourself and know that you have a special gift, indexing the majority of your assets makes the most sense.
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Passive management does not give investors the return of the index; it gives them the return of the index less costs. So, the longer they have their money passively managed, the greater their underperformance will be relative to the index.
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Investing is a funny business. It’s really easy to be average. Just buy an index fund. It’s really hard to be above average.
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An investor is not likely to obtain superior results by buying a broad cross-section of the market. The more diversification, the more performance is likely to be average, at best.
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I am much more inclined to buy a stock that has been kicked out of an index because then it may have value characteristics — it has underperformed.
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On average, the average large-stock fund manager produces average returns before fees and below-average returns after fees. So compared with after-fee returns, an index fund is superior.
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