The Market is The Market

If ‘the market returns’ are the market returns,
And the market return can only be made up of active returns and passive returns,
And if the passive return before fees equals the market return,
Then the average return of all the active investors before fees must equal the market return too.

Therefore the average active investor will lose to all passive investors by the increased cost of active management.

But if you’d rather read it from Nobel Prize Winner William Sharpe, click here.

Note: Today is the last day to enter – don’t forget to enter this month’s Money Movie Giveaway! All you have to do is leave a comment on the contest post by clicking here.

Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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