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Rising Star
You decrease variability in your returns. Both positive and negative. Most people think they're above average (in most things - including investing) and so overrate their ability to beat passive ETF returns. Some people can. Some people can't. Are you willing to bet your financial future on it? I'm not.
No and no
Hell no. If you have the secret to better investing, then start signing clients ASAP. Otherwise, just invest in index funds like people who understand data.
I absolutely believe in quality active investing. Ymmv.
“Let me provide 3 or 4 examples to convince you, 2 of them run by people retired or retiring”
Rising Star
The great active funds will outperform over long periods. The problem is picking them before they outperform.
The empirical evidence is that most people are horrible at picking funds (though they’re way, way worse at picking stocks), partly because they tend to chase historical returns, which rarely persist, and don’t consider more important factors such as process. Of those who pick funds that outperform, they don’t capture the full outperformance because they try to time it. All this is also true for most institutional investors.
So no, passive investing is not overhyped. It’s clearly the best choice for almost all individual and most institutional investors. To pick outperforming funds, you’ll need a lot of expertise, a lot of discipline, and a good bit of luck—most people have none of the above.
It's VERY easy to lose money when actively investing / chosing specific stocks. But it's VERY easy to make money by passively investing. At least in my experience
Passive investing can make great returns, and active investing can make great/Amazing or no/negative returns. All YMMV.
***by active, I meant have a portfolio manager from a brokerage house (as per the article) do the managing, not me
The answer is still no. Fund managers are not proven to be better and usually charge enough in fees to negate any potential gains.