There are a lot of students who walk through the doors of the University of Chicago's Graduate School of Business ready to contest the validity of the Efficient Markets Hypothesis. Few, however, manage to walk out without having "drunk the Kool-aid". It turns out to be very, very hard to maintain the belief that you can foretell the future against the pointed questioning of some of the world's smartest economists.
I was one of the Kool-Aid drinkers. I then went and spent some time living with a money manager who was an acolyte of Warren Buffett. I greeted more than one sunrise during our heated games of "dueling regressions". (This story is dedicated to Matt Zeitlin, who previously held the title for nerdiest blog confession.)
Now ever since Michael Lewis' article on index fund management came out, I have been experiencing something perilously close to PTSD. Some would disagree, but I think it's a pretty good article. It is, to be sure, grossly simplistic. But as any financial journalist will tell you, it is very hard to get a 15,000 word treatise on the EMH, with math, past an editor. And if you do, no one will read it.
Lewis completely glosses over distinctions between various forms of the efficient markets hypothesis, bizarrely simplifies arguments about the various premia on asset classes (those looking for a solution to this riddle might start with the word "liquidity"), and tells a suspiciously pat morality tale about a stock-jammer-turned-sainted-investment-advisor. But he gets the big thing right. The world would be a better place if we all took home the point of his sermon:
You can't beat the market. YOU can't beat the market. YOU CAN'T BEAT THE MARKET.
It doesn't matter which version of the EMH is correct. It doesn't matter if the behavioral finance guys are correct. You--adorable, clever, hardworking little you--are mathematically just as likely to underperform the market as outperform it. You would do better to go to Vegas and sit down at the $25 blackjack table with a firm resolve to walk away as soon as probability has varied a few hundred dollars in your favor.
And the guy you're paying to manage your money? Same deal. Statistically, in fact, he will give you a lower return than a broad market index, because of his salary and trading fees.
Hedge fund managers may make money. But it's a pretty safe bet that they do it in one of two ways: they develop systems that let them trade on information faster than everyone else, so that they can make money in the fraction of a second before the price changes; or their longer lock-ups allow them to trade in asset classes where markets are less efficient than large-cap stocks. But the experience of mutual funds over long periods of time indicates that everyone who thought they were a genius turned out to be lucky, not smart; the current spate of meltdowns seems to be sending the same message about hedge funds. And when there are detectable algorithms that let you make excess returns, they tend to get detected, whereupon they no longer work.
The stupidest thing you can possibly do with your money is what most Americans do: either buy and sell individual stocks, or carefully analyze the list of mutual funds to see what the "best" (i.e. highest return) ones are, and plow all your money into them. You see the fine print at the bottom that says "past returns no guarantee of future results"? They mean it. In fact, those guys are not only not particularly likely to end up in the top funds next year; they may actually be destined to underperform. That's because the manager has a "strategy" and whatever that strategy was worked well last year. Since it is no longer last year, that strategy is likely to be counterproductive.
You can't beat the market, and neither can the jerk on the phone trying to sell you stocks. Put your money in the broadest possible index fund (being young and having no children, I'm all equity with a 70/30 split between domestic and international; your mileage may vary). Then leave it there. Don't even peek. Throw the statements away unopened. Rebalance once a year to keep your money at your target allocation, and otherwise don't think about it. If you want the thrill of gambling, go to Vegas. At least they'll give you free drinks.
This is a serious comment, not intended to be antagonistic, and I write it in the hope that you will seriously consider (as you generally do) my argument.
1. The fact that half of the dollars invested in the market will underperform and half of them will outperform some kind of aggregate average does NOT mean that half of investors will underperform and outperform. People always draw this conclusion, but it's not that every investor has to even out, it's that every dollar invested does.
2. Considering that something like 90% of mutual funds underperform their benchmarks, and over two thirds of the money in the market is in mutual funds, that should in fact tilt the balance in favor of small individual investors choosing their own portfolio of individual equities. Do you see where I'm going with this? If mutual funds are always going to account for the vast majority of the underperformance in the market, those not in mutual funds actually have a far higher probability of outperforming their own benchmarks (most mutual funds, by the way, underperform because of scale--they're too big to buy or sell a stock without moving it in the wrong direction. Successful funds become unsuccessful not because it's impossible to consistently beat the market, but because successful mutual funds get flooded with more money, and it is impossible to consistently beat the market if you're running over a billion dollars).
*I should note that John Bogle, the founder of Vanguard and the father of the index fund, went on Kudlow and Cramer three or four years ago and said something along the lines of: an individual money manager can consistently beat the market, if he's decent at his job, as long as he never manages more than $500 million. Hedge Funds, which don't have to accept new funds the way mutual funds do, have been and continue to be far more successful than mutual funds because of scale.
3. The idea that a balanced portfolio of index funds requires less research than a balanced portfolio of 5 or 10 individual stocks is preposterous. Which indices do you want exposure to and why? Megan, given the weakness of the U.S. economy and Wall Street's disgusted reaction to the Fed's quarter point cut, don't you think it would be a better decision to allocate more than 30% of your investment assets to international? I will make you a bet that doing so will improve your performance next year. That will merely be anecdotal evidence in favor of my point, but put enough anecdotes together and you have a data-set.
4. I would make other arguments about what allows individual managers to consistently beat the market, but I won't waste your time with opinions gleaned from observation rather than fact and logic.
Full disclosure: Jim Cramer is my uncle. I am the head writer for his show Mad Money, and I helped him write his two latest books, so obviously I have my own biases and am quite self-interested in trying to demonstrate that individual investors, choosing their own stocks, can consistently outperform the benchmarks.
Your points basically align with Ramit's, but he made a mild Simpsons reference halfway through and you didn't, so I'm afraid he wins.
I guess you never heard of the people who invest Harvard's endowment. They beat the market by a wide margin year after year after year.
Considering that something like 90% of mutual funds underperform their benchmarks, and over two thirds of the money in the market is in mutual funds, that should in fact tilt the balance in favor of small individual investors choosing their own portfolio of individual equities.
My understanding of this was the same as Megan's: that underperformance is the result of fees, not of managers reproducibly making sub-par investment choices. If the latter is actually correct, then I definitely see your point.
seems like once upon a time you invested in people that you thought would produce a product that was worth something... and being worth something, it's value would grow. That was probably a fable then too, and wildly optimistic... but it doesn't hurt to revisit the idea from time to time. The current micro-loan phenomena still seems to work that way some places in the world...
my favorite protagonist of that was Elmer Fudd, King of the Elves:
Yankee Dood It Cartoon 1956
course back then we thought everything could grow forever, and that's the rub. a closed loop always reaches equilibrium. As individuals we can always play the system and maybe win a bit, but it will always reset.
I guess there isn't much new ground to be had, we've been over it with a backhoe. Only Ideas are profitable, because they are free...
No, they underperform before fees. The link someone provided to Ramit's site above has the info. But 85% of mutual funds underperform every year before fees (it's not even necessarily a result of bad decisions, it's just that managing 10 billion dollars is a lot harder than managing one billion because you can't be at all nimble). That's why owning most funds is a sucker's game (most--there are great managers, and you can identify them if you know what you're doing--they're the guys who do well when the market does well and do well when it does poorly--you pay a guy to manage your money so that you'll at least break even when the averages go DOWN, not so that you'll beat them every year when the market is fine--over the long run, viewing mutual funds as about capital preservation and identifying the right ones accordingly should see most outperform the benchmarks. Then again, it's just as easy to pick your own stocks).
Cliff Mason:
"Considering that something like 90% of mutual funds underperform their benchmarks, and over two thirds of the money in the market is in mutual funds, that should in fact tilt the balance in favor of small individual investors choosing their own portfolio of individual equities ..."
I believe studies have shown that small individual investors on average seriously underperform the market (primarily because they trade too much and get killed by transaction costs) and would be better off in mutual funds.
My employer's pension fund is 84% in equities, which is why I own none.
Sure, it's not my contention that individual investors will always outperform at all. I simply believe that it's possible for them to do so if they don't make elementary mistakes like those cited. I realize that most individuals do make those mistakes, but learning to be a better investor and learning how to be a good index fund investor take the same amount of effort, and I think the returns will on average be better for a small individual investor who educates him or herself about the market and invests wisely in individual equities than for small individual investors who buy some index funds and don't look at them for the next twenty years.
"I guess you never heard of the people who invest Harvard's endowment. They beat the market by a wide margin year after year after year."
Going out on a limb here, I suspect Megan has heard of the Harvard investment strategies. She may even have heard of the similar Yale strategies.
But those strategies are of limited utility for most individual investors, for the following reasons: (a) they rely on heavy diversification into asset classes into which most individual investors have limited access, such as hedge funds, private equity and real assets (for a while, Harvard was the largest institutional owner of timberland in the world, but you & I might have some difficulties investing in a diversified portfolio of forests), and their size and reputations get them first crack at the best alternatives in those classes (the best hedge funds and private equity funds can pick and choose their investors); (b) Harvard and Yale are tax-exempt, unlike individuals - which makes a huge difference in their ability to move in and out of investments without taking a huge tax hit; and (c) Harvard and Yale don't need to plan for retirement and thus can take a longer-term view than individuals.
Note what I said: to the extent that hedge funds make money, they do so by trading in asset classes where prices are not as efficient or liquid as stocks. As Dr. Manhattan points out, the Harvard and Yale endowments have huge investments in real assets; they're also the beneficiaries of tax-dodging stock gifts and get first crack at all sorts of deals from grateful alumni and bankers, and have all sorts of other advantages not available to the general public.
Cliff brings up some interesting points, but he makes some key errors.
The point that "half of investors must underperform" only applies to average returns and not the returns of an index. Average returns typically substantially underperform any applicable index, and then mutual funds underperform that after fees and trading issues. There are some very good quant explanations of this by Phd economists.
The point of index funds is to not play timing games. People are BAD at timing games, and typically you screw yourself 75% of the time thanks to psychological issues. You want to keep a certain weighting based on your future need for income. Trying to beat the market by chasing emerging markets after a volatile year in the US market is the same idiotic strategy as buying the hot mutual fund. Just buy SPDRs - far superior over the long term.
Some people do make money in the market over the long term, but much of this comes from luck and survivorship bias. You don't get to keep playing if you have a stretch of bad luck to start off with, and you usually have to quit after any substantial low period. Read Confessions of a Street Addict for something of an explanation of this. Or just look at what happened to Brian Hunter and the Havahd boys from Sowood Capital.
Predicting who will make money is a fool's game, so hence why the right answer for the average person is "INDEX FUNDS". People can make money leveraging their own information asymmetries - as highlighted on a high volume CNBC show. Great to see a reprise of the giraffe shirt BTW. Individuals quickly run out of that kind of information or arbitrage it away and the strategies used to make money on a few companies they know well get them in trouble when they apply it to their whole portfolio of companies they don't know well. Brian Hunter's nat gas trade applies very well here.
There's a reason why brokers, mutual fund, and many hedge funds act as asset gatherers - they live off of fees rather than any sort of performance. Your broker takes you to dinner and talks to you for a few minutes every few days - talk to Cramer about how much he loved being a broker at GS. Your mutual fund salves your conscience, sends you some snazzy reports, and can be on direct deposit. Hedge funds take you to polo matches and make you seem sexy at dinner parties in 2004/5. They don't, and can't, live off of performance. A private banker or hedge fund can be useful for people with substantial assets and risks - 99.99% of the country is much better off in index funds and then putting some play money, "Mad Money" to coin a term, to work leveraging off their own insights.
Cliff, how do you account for trading costs and taxes in your argument? In order to argue against EMH, you don't just have to show that is is possible to "beat the market," you have to show that you can do so by enough to make up for the additional transaction costs and tax hits you will take by engaging in the extra trading. Otherwise you are better off not bothering.
P.S. I love watching Mad Money - just not for the investment advice.
1. The fact that half of the dollars invested in the market will underperform and half of them will outperform some kind of aggregate average does NOT mean that half of investors will underperform and outperform. People always draw this conclusion, but it's not that every investor has to even out, it's that every dollar invested does.
This point is actually subtly incorrect, not that it matters for our discussion. Shares actually enter and leave the market due to companies selling new shares and buying back shares. Unless you count those dollars by the issuing companies as "invested in the market," every dollar does not even out. The net effect, incidentally, is that dollars invested by investors underperform the market historically-- companies tend to buy their own stock low and sell high. Of course, this particular impossibility to meet the broader market indexes applies to index funds as well.
The idea that a balanced portfolio of index funds requires less research than a balanced portfolio of 5 or 10 individual stocks is preposterous.
The idea that any portfolio of 5 or 10 individual stocks possibly hedges as well as a balanced portfolio of index funds is preposterous, and I hope you weren't saying that. I certainly grant that one can get more hedging of particular risks through unusual instruments, but you said "individual stocks."
Hedge Funds, which don't have to accept new funds the way mutual funds do, have been and continue to be far more successful than mutual funds because of scale.
By "continue to be" I surely hope you don't mean "return so far this year," because that just isn't true, sir. I agree that keeping a hedge fund small helps prevent the hedge fund's own positions from helping compete away the arbitrage as quickly, in addition to the technical advantages of trading more quickly that Megan mentioned. However, people can start up competing hedge funds with the same ideas and concepts as existing ones, gleaned from the same ideas-- and have. The same problem arises, too many people with the same strategy competes away the arbitrage. Too many people hedging with the same strategies causes formerly anticorrelated instruments to be correlated with each other, as they are bought and sold at the same time.
I will make you a bet that doing so will improve your performance next year. That will merely be anecdotal evidence in favor of my point, but put enough anecdotes together and you have a data-set.
Except that there are actual datasets in favor of Megan's position. A 30% international portfolio over nearly any time period has the same performance with less risk than a fully domestic. Perhaps more is warranted, and 30% isn't enough-- but the vast majority of individual investors fall on the side of not having enough international exposure. Megan's portfolio I think is quite reasonable. (Disclosure: It mirrors my own.) That some people are right does not guarantee that they are not lucky. Speaking of Jim Cramer-- how well did he do predicting the timing of the end of the Internet bubble, or the real estate bubble? His "bets," and yours, seem to be that what has just happened will continue to happen. I'd be more impressed with evidence that you've predicted things correctly in the past.
given the weakness of the U.S. economy and Wall Street's disgusted reaction to the Fed's quarter point cut,
So, what, your opinion would be totally different with a half point cut?
Megan, your contention about how hedge funds outperform is theoretically very appealing. But there are hundreds of hedge funds that consistently beat the benchmarks and trade in nothing but equities.
How can they do this? I'm going to borrow the thesis from Mad Money the book: there are probably three or four thousand money managers who run ninety-odd percent of the money in the stock market. These are NOT 3000 economically rational actors. They have all been trained by the same sets of people and all have methodologies that, rightly or wrongly, they consider effective at generating above average returns.
Because of the similarities in training and philosophy, you can basically break down the market into value managers, growth managers, and momentum/technical analysis managers. Very few of these people take a scientific approach to investing. They have very set ways of analyzing stocks and the market in general, and like most people they rarely change their minds about the merits of their methodology.
I'm sure you can at least agree that the vast majority of money managers do not let experience or evidence get in the way of how they've been taught to invest.
The managers who do consistently beat the market all have one thing in common even if they don't recognize it: they know how to game the (for lack of a better word) worldview of these three predominant types of manager.
This is not something that is easily susceptible to any type of quantitative analysis. Trying to go after how these biases, because they are so complicated and interact on so many different levels, isn't going to be within the realm of possibility for the quants for a very long time.
But OK, perhaps you'll admit that these biases do exist and that gaming them would lead to the creation of outsized returns. You would say, if such a method exists, it would be adopted by enough people running enough money that the opportunity for profit would be erased.
Here's the problem with that: if we've stipulated that even just 75% of the big money managers are set n their ways and believe they have the working formula, then that means they aren't going to adjust their strategies.
The problem with viewing everything like an arbitrageur is that in the real world it can take decades for this kind of "edge" to be erased by too many other investors taking advantage of the same edge, if it ever happens at all.
Take this example: Back in the seventies Ken Fisher, money manager and author, widely publicized the idea that you could make a lot of money by evaluating small, high-growth companies based on their price to sales ratio rather than the price to earnings ratio on estimated profits three or four years into the future, which is how it used to be done. These days using the price to sales ratio is completely standard practice, but for about twenty years between when Fisher promoted the idea in his first book (I believe it was his first), and the mid-1990s, this idea had never gained much traction even though it was useful and did during that time period allow investors who used the idea to generate above-average returns.
What took so long? Nobody had been trained to use the price to sales ratio, and since even failing managers believe in the efficacy of their methods, few took advantage of this opportunity. It wasn't until a new generation of managers who had all read Fisher's stuff took over that this idea gained real traction.
Ultimately, I believe it's possible to beat the market by focusing on the psychology of three small groups of people who, because they're in charge of most of the money in the market, are the near-term and medium-term arbiters of stock prices.
Here is an example of how this works, and then I'll stop boring you to tears. Starbucks (SBUX) has been a great short for a little more than a year, and should continue to be a great short for at least the next six months. Why is SBUX going down? Most managers would tell you that it has fallen and continues to fall because it has saturated the market and now has slowing growth with no clear alternatives for getting that growth back on track.
That's a superficial and incorrect explanation. Before Starbucks started failing to beat Wall Street's earnings expectations somewhat over a year ago, it was a stock owned primarily by growth money managers who are attracted to stocks with high growth and high valuations. Once SBUX started slipping, those investors gradually (this is very important) stopped wanting to own SBUX. As the year went on, more and more of them jumped ship.
But there are still some growth managers who believe that SBUX can get its mojo back, and they are willing to pay a higher multiple for the stock than the value managers would. Until those growth guys get out of the stock and drive it lower, it will be too expensive for value investors to own (they only like to buy stocks with low multiples).
The decline will stop when the last of the growth investors who are willing to pay more get shaken out of the stock and a new base of value shareholders considers it cheap enough to be worth buying.
Information about investor behavior is what's necessary to beat the market, not correctly analyzing the fundamentals of a company or the market (more like analyzing how imperfectly rational money managers will respond to the fundamentals).
Now analysts hardly ever focus on this kind of thing, and most money managers, especially at mutual funds, don't either. There may come a day when this information is widely accepted and well-analyzed, and then it will stop being useful. But until then, I regard this as the most viable strategy for outperforming the averages, and one with a better than 50% chance of success.
First, to defend the reputation of Jim Cramer. He called the collapse of the internet bubble in late march of 2000, a little after the top, but not by much, and he spent the rest of the year shorting those stocks, which is why his fund returned over 30% in 2000. And when I say he called the collapse of the internet/tech bubble,I mean he did so publicly on thestreet.com--you can check in their archives.
As for the housing bubble, he told people to get out about a month before the top in 2006. I can dig up the exact dates for you if you want because I have all the scripts for every Mad Money broadcast except those from the first two months. And he's stayed bearish on housing to this day.
Now to clear the air: I agree that most people should put their money in a well balanced portfolio of index funds. That's the correct choice because it requires far less time, effort and discipline than trying to manage a portfolio of 5 to 10 individual stocks. If you have the time, inclination and discipline, then yes I believe you will outperform the indices, but obviously there's now way to test this mathematically or even any way to truly measure the "right" methodology.
I disagree that outperformance is all luck. See my previous post for an explanation of what I think works and why. I will repeat though that very few money managers approach what they do as arbitrage, and that leaves "arbitrage opportunities" open and profitable for far longer than you would expect.
So yes, most people shouldn't try to trade. But there are ways to do it that work, even for average Joe investors. It takes a lot of time, effort, and discipline, and this is why I think a balanced portfolio of index funds is the right way for the vast majority of people to go, but if you have those things then I contend that you have a better than 50-50 shot of beating the returns from an index even after taxes and fees (fees are nothing these days next to the beasts they were before Reagan--not that I was alive then).
PS. I was suggesting Megan have more international exposure, not less, and would recommend at least 50% for the coming year. And yes, I would have been much happier with a 50 basis point cut. If you want to know why you should watch Mad Money tonight starting in 5 minutes--these are Jim's reasons, not mine originally, but he knows a lot more than I do and I agree with him.
Cliff, I understand that you're just protecting Cramer's reputation, and that's good. But wether he -- or Buffet or Lynch or any other superstar -- has made some great calls in the past doesn't have much bearing on whether the average John Q. Investor ought to just get into some index funds and back off. Yeah, some people do win big, but the average guy, even the average professional, probably won't.
Furthermore, paying a lot of attention to Jim Cramer's two big wins, or those of the Next Big Thing manager or whoever else, is dangerous. Every gambler remembers the time they hit the $5000 jackpot, but no one ever thinks about the hundred other nights they walked out down $100. It's exactly this kind of thinking that gets so many people to believe that they'll come out above average. A lot of damage is done because people can point back in their own archives (mental or otherwise) and say "see, I called that one, and I won big." They're never reminded of all the other predictions, made day in and day out week after week, that didn't work out so well.
Just to be clear, I'm not saying you or Jim Cramer are ignoring other less flattering performances, or that his record isn't still great on aggregate. But these types of anecdotes are the kind of thinking that leads a lot of people to invest irrationally when they should know better.
Jared, you're right. I only pointed to those two things because John Thacker asked specifically about what Cramer's opinions were at the time. I never intended that to be part of my argument for why individual investors can outperform.
Investing, however, really isn't much like gambling. I'm actually working on a piece about how misleading this comparison is right now, for a variety of reasons so I won't go into this at great length, but fundamentally I believe that if a person directs a great deal of time and energy into thinking about how to invest and doing research, that person will perform better than someone who does neither of those things. I'm not aware of any studies that truly measure this. I'm not talking about the amount of time a person spends trading in and out of stocks in a day--that's not thoughtful or useful effort. There are probably fewer than a hundred people on earth who have the talent to consistently make money day trading, I mean spending time reading the transcripts of conference calls and running screens to test the validity of new predictive ideas.
Cliff, I'd never suggest that investing is anything at all like slot machines or roulette. (Personally, I'd contend that it's not that dissimilar from betting on football results, or skill games like backgammon.) But whatever difference there is between financial investing and playing poker, I think biasing our memory towards the big wins is one thing they both have in common. Perhaps gambling was a poor metaphor overall, but that mindset effects both.
PS Maybe this is something I should have brought up in this post instead.
The Michael Lewis article was entertaining, but the commercial for Dimensional Fund Advisers basically invalidated its whole point. Megan, Michael, the University of Chicago, and DFA all say you can't beat the market -- but DFA has beaten the market, consistently.
I have most of my money with a value investor whose family firm has been trading since the '40s. The other investors all have minimums in the millions of dollars; we got in thanks to a personal connection. So far, he's beating the market solidly, but it's only been 5 years.
Jared, Or horse racing. Cramer references this in his first book. Understanding what runs well in different conditions is an advantage that can be exploited if one is willing to do the work. Many aren't willing and even a well balanced portfolio in index funds won't help the average Joe overcome the behavioral tendancy to bail during a significant correction. And "stocks return to their rightful owners" JPM
MM:"The stupidest thing you can possibly do with your money is what most Americans do:..."
is pay No attention to the value of the denominator. In this case, the U$D.
MM: "As Dr. Manhattan points out, the Harvard and Yale endowments have huge investments in real assets..."
"investments in real assets" are hardly out of the reach of individual investors..
see: http://www.bloomberg.com/markets/commodities/cfutures.html
as intro
I heard an old joke at U of Chicago GSB about the economist who won't pick up a dollar bill because if it were a real dollar bill someone would have already picked it up...
I agree with the EMH, but not the pure version.
There will always be some people, who because of sheer talent and luck, will find an arbitrage opportunity - as a result of growth (e.g. entrepreneurs), new technology (inventors), new understanding/branch of economics (Dimensional Fund & GS's Alpha from Fama's ideas). I'm thinking people's success rates in finding and exploiting arbitrage opportunities are probably about the same as an entrepreneur's - about 1 in 10. Hence, the assertion that an average guy will probably fail if he tries to beat the market.
Frederick Alfredo
I am conflicted here. I did not attend Chicago - although my dissertation in Finance (on Tax Theory) did use Chicago economists. But there are plenty of opportunities to beat the underlying market with both the three anomalies mentioned in the next post and also with some work on timing. Buffett and Peter Lynch have proved that the theory can be wrong.
But in order to beat the market you need to understand two additional issues. First, there are going to be times when you do not beat the market in fine fashion. For Buffett one example was US Air. Second, a good deal of success is based on a simple principle which Buffett once suggested in the Berkshire annual report. - It is alright to put all your eggs in one basket, but keep a very close eye on the basket. Most investors are not consumed with trying to understand market movements. If they are not the smartest notion is to follow what McArdle suggests in the next post - put your dough in index funds. (Even with that simplification it is worthwhile to look at the index funds - expense ratios and other tweaks can vary returns by what the investment managers call basis points - and in some cases those basis points compound over time.
Let's see, from the comments, we have:
* Most Mutual Funds underperform
* Most individual investors underperform
* A few special cases out-perform because of tax issues
* Some lucky people will outperform
Man, if I could only know who those people were ahead of time, I'd make a KILLING! I hope no one else finds out who those people are.
"If you want the thrill of gambling, go to Vegas. At least they'll give you free drinks."
ALWAYS TIP THE DRINK GIRL
As someone with no time to keep up with the market, I love how Vanguard gives you the option of not having a statement sent out.
I am investing for 30-40 years long, so not only is ignorance bliss, any information is an opportunity for screwing myself up.
Don't we need experts to look at all the data and tell us that experts are not needed?