"Performance chasing isn't dead," says Morris.
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Stock Pickers Lose Out To Index Funds
May 3, 2010
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Its a very good thing that "performance (alpha) chasing" isn't dead, because in order to have an index at all you need to have someone picking stocks. What we don't know is what the optimum ratio of index investors to stock pickers will be, 2/5, 1/2, 1/1, or what? Morningstar's own research shows conclusively that 85% of stock pickers don't do as well as the index in any one year, and a recent study from Belgium showed that fully 87% of those who do beat it do so simply by being "lucky". But we need those who keep trying so the rest of us can do "average," ie. better than 85% of professional fund managers. God bless the stock pickers!