Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Very recently a ton of articles have been published that basically are unfriendly to active mutual fund management. Many of these have been referenced on this MFO site. Here is an internal Link to one such example:
According to Bruce Hauptman “You have never met a money manager that isn’t in somebody’s top quartile”. This quote was extracted from Norm Augustine’s famous and funny book titled appropriately “Augustine’s Laws”. It is Law 5 from a group of 52.
In his text, Augustine reports that, on average, folks position themselves in the top 77% position regardless of what is being measured. Only 2% of these folks suspect that they are in the lower one-half performance grouping. I suppose that overconfidence holds true in the investment universe.
Augustine also summarized one version of the Pareto Principle as “The world is made up of those who make things happen; those who watch things happen; and those who ask what happened”.
For completeness, I present Law Number V now: “one-tenth of the participants produce over one-third of the output. Increasing the number of participants (fund managers) merely reduces the average output.” Finding a long term successful fund manager is a challenging task indeed.
Augustine is accessible on many internet videos. Here is a sample Link to one of them:
