Still Hard to Beat the Market

NYT: Beating the Market: It’s Still a Tall Order

In an interview, Russell Wermers, a finance professor at the Smith School of the University of Maryland, said he has found from years of research that the odds of outperforming the market are very low, even for sophisticated professional money managers using the most advanced techniques. The odds are even worse for individual investors.

Professor Wermers acknowledged that the prospect of beating the market remains a powerful temptation for many people. But the recent bear market may have opened some investors’ eyes, he said.

“If active management doesn’t acquit itself in a five-year period that includes the worst bear market since the Depression,” he said, “then it’s yet more compelling evidence that most investors should not even try.”

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