6Why Investment Professionals Can’t Predict Markets


In previous chapters, I’ve shown what professional investment advice and management costs. Now I’ll show why it doesn’t benefit you—that is, why it doesn’t increase your wealth.

In this chapter, I’ll explain the very sound reasons why professional investment managers should not be expected to beat the market. Then, in the next chapter, I’ll describe the extensive evidence that shows that, indeed, they cannot.

Active and Passive Management

Suppose you were asked which investment manager you would like, one who tries to beat the stock market average or one who is content just to equal it. What ...

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