People (Actually) Stink at Picking Stocks...
0 up · 0 down · 0 ratings
Description
Because while a very small number of people truly do have the ability to outperform through discretionary stock picking, these people are very few and far between, and by the early 2000s, the data proving this was starting to pile up. Because it turns out that these active fund managers actually kinda stink at picking stocks. And not just occasionally, and not just during bad years, but consistently. And study after study showed that roughly 90% of active equity fund managers underperform their benchmark over long periods. And when you consider the fees they take for managing your money, it's even worse.
The short argues that only a very small number of people can truly outperform the market using discretionary stock picking, and that the evidence for this was accumulating by the early 2000s. It then claims that active equity fund managers “kinda stink” at picking stocks, not just occasionally and not only in bad years, but consistently over time. The speaker cites studies finding that roughly 90% of active equity fund managers underperform their benchmark over long periods. Finally, it adds that even when investors accept active management, the fees fund managers charge make the situation even worse when evaluating results after costs.
Viewers react positively to the content and its delivery, describing it as serious topics presented in an unserious, fun way. Several comments express general appreciation and enthusiasm, including “love your videos” and “Thanks!! <3.” One viewer playfully emphasizes the point with “Stinks” and another frames the idea as a “PsyOP,” arguing that portfolio manager underperformance is influenced by mandatory constraints like holding a set percentage of bonds and that managers earn via commissions rather than yearly gains. Another commenter says an average person with knowledge and strategy can outperform them in a year.
Topics · finance · stock market · markets · economics · business
Questions answered
- How many active equity fund managers underperform their benchmark over long periods?
- Roughly 90% of active equity fund managers underperform their benchmark over long periods.
- Why can active stock picking underperform even when active fund managers manage money for investors?
- Active equity fund managers are claimed to underperform consistently over long periods, and the fees they charge can make results even worse after costs.