Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.
From Barry Ritholtz
Often, investors will discover a manager after he's had a terrific run, usually when he lands on a magazine cover somewhere. Invariably, funds swell up with new investor money just before they revert to their long-term averages.
A well-designed 401(k) plan is an enormous competitive edge when recruiting and retaining employees.
Outcome is simply the final score: Who won the game; what numbers came up in a roll of the dice; how high did a stock go. Outcome is the result, regardless of the method used to achieve it. It is not controllable.
You can blow on the dice all you want, but whether they come up 'seven' is still a function of random luck.
Any Wall Street advertising that does not go into the boring details of methodology is most likely to be pushing past performance.
Indeed, eventually, random outcomes all revert to the mean, meaning that streaks eventually end. Understanding this is a key part of intelligent and rational investing.
Rather than engage in the sort of selective retention that so many investors tend to do and pretend mistakes never happened, I prefer to 'own' them. This allows me to learn from them and, with any luck, avoid making the same errors again.
I have been a member of the Microsoft-bashing society for quite some time.
History is replete with examples of tech firms that were marginalized by new companies and technologies.
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