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The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

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Chapter 7: Jack Bogle Takes on the Performance Cult (and Wins)

The lesson that maybe it’s not even worth trying to beat the market makes its circuitous way into the investment business.

In 1959, a pair of roommates at the University of Chicago came up with what they thought was a swell idea: Somebody should start a mutual fund that buys and holds the stocks in the Dow Jones industrials average. Edward F. Renshaw, an economist just finishing his Ph.D., and Paul J. Feldstein, an MBA student, were in no position to launch such a fund themselves. [1] They decided to share their idea for an “unmanaged investment company” with the world by submitting an article about it to the Financial Analysts Journal.

The piece, published in the journal’s ...

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