The Arithmetic of Active Management

In the video featured below, Professor Kenneth French mentioned the paper written by Nobel Laureate Economist William F Sharpe. Well here it is.

This type of information needs to be seen in a completely different light to what those of us who are more enlightened call financial porn because it is the informed view of a very highly rated and acclaimed academic. Unlike fund management companies who pump out marketing material designed to entice unwitting investors to part from their money William F Sharpe and others like him have spent decades trying to get to the truth. They have no axe to grind.

The question you have to ask your self is, Do you want to be one of the (as William F Sharpe puts it) "individual investors ... foolish enough to pay the added costs of the institutions' active management via inferior performance". Of course there is also the famous Dirty Harry saying "What you want to ask yourself is ... Are You Feeling Lucky?"

For more information on William F Sharpe see this