Albert Pujols hits a home run against the Padres, May 19, 2008, photo: SD Dirk via Flickr
Corporate 401(k) plan sponsors pick bad funds for their plans, according to a 2006 study. Then the participants in the plans compound the problem, again picking funds headed for a fall.
Why? Because though the Securities and Exchange Commission mandates that funds put in any piece of marketing the disclaimer that past performance is not indicative of future results, it seems no one believes them.
Swedroe, an avowed proponent of passive investing, wanted to clarify his position. It’s not that investing skill can’t exist, he argued, it’s that if it does, the markets will, over time, erase that advantage. And, just as importantly, that it’s impossible to predict where that skill will show itself. We’re betting against the odds if we try to pick the winning investors (or fund managers). Continue reading →