Got it, thanks! No, I was not considering trying to find the magical active money manager. Again, I was assuming that there is data to show that this mythical unicorn doesn’t really exist.
Active managers and financial advisors will never stop making spurious arguments that they have the magic sauce to outperform passive index investing. This is probably all you need to know:
1. With mathematical certainty, a dollar passively invested in an index fund will always outperform the average actively managed dollar in the same market. See 1991 paper by Noble economist William Sharpe: https://web.stanford.edu/~wfsharpe/art/ ... active.htm
2. Barely 1-2% of active managers will outperform their benchmark indices over 25-30 year time periods.
3. Studies have found that among actively managed funds that have beaten their indices over the past 15 years, less than 10% will do so over the next 2-5 years. In fact, they tend to do worse in the next 2-5 years than the actively managed funds that underperformed in the past 15 years.
4. No one has discovered a way to proactively identify the rare active fund or manager who will outperform going forward.
Statistics: Posted by spindrift103 — Mon Apr 08, 2024 2:08 pm — Replies 8 — Views 280