Quote:
Originally Posted by Slava
^ I question the whole idea that passive beats active. I wrote a paper on this and it’s being reviewed. The main claim for that is SPIVA, which is put out by S&P and it seems like everyone quotes that to conclude that ~97% of active managers don’t beat the index. I can get into it (if you’re interested), but it’s basically marketing and there are several major flaws.
And that’s on the equity side. The fixed-income side I question even more.
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I mean, in aggregate passive has to beat active because of the fee savings. If you added up all the active investors, in aggregate they own the average of the total stock market (it's literally impossible for them to own anything else on average). So the gross returns for the universe of active and passive investors has to be the same, but active pays more fees.
Now, all that said I actively manage my own money, and have outperformed the indices for a long period of time. Lately it's mostly been by taking the other side of trades from people doing dumb things (eg meme stocks). There are some active investors with truly terrible returns so if you take the other side of their trades...