Yes they are. That’s why you put your money with the 20% who aren’t. Capital preservation is the name of the game right now and in all times like these. You need money managers who know how to manage money, not just explain why they lost your money
80% of professional money managers cannot beat the market with 100% of their attention but you want me to pick the ones that will beat it going forward in my spare time? How about i just settle for beating 80% of them with no gambling or work on my part?
Most managers have formulas that they use and they are very slow to adjust those formulas. Those formulas are designed as much or more to make them money than to make you money. This is particularly true when they can convince a gullible public that it is ok that they lost 20% of your money because the stock market lost 21%. That’s not good enough for me. The good managers know when it’s time to do certain things and then do them. Sometimes that’s going to cash even when the radio people tell you cash isn’t good because your value is eroding with inflation. Losing 8.5% to inflation is better than losing 20% of your principal and losing 8.5% of the buying power of the 80% that remains.
Unlikely, because I have zero interest in a financial planning company charging me exorbitant fees to have my money underperform the market over the long term. The (U.S.) stock market always goes up, it's just a bumpy ride.
It's closer to probably 98%, to be honest. On a yearly basis, ~95% of actively traded funds underperform the market, but the 5% that perform as good or better are not the same each year, meaning that over time periods of more than a couple years, almost none of them will consistently outperform. So unless you can have Ray Dalio or Carl Icahn as your money manager, a zero-fee S&P 500 or Total US Market index is your best friend, and the only stock investing any of us should ever really do.
It's never that easy. You are talking about perfect timing. A money manager may not got to cash until the market is down 10%. Then don't get back in until it's up 10% from the bottom and they are confident it's back on track ... Not sure you are better off in that scenario when you are also losing cash value to inflation ... I keep track of 5 asset classes and each month invest more in the asset that is down the most (or up the least) over the last year. I Like Buffet's famous "be fearful when others are greedy, be greedy when others are fearful" quote.
And it's often even worse than that, because they charge you a constant premium to do that, and possibly extra fees on top for the actual transactions.
And that's still ignoring the overwhelming likelihood that they're moving your money in and out of sexy-sounding actively managed funds that take another 1-2% haircut off your investments when they do have you invested. So no thanks to any of that. I'll keep my biweekly investments into 3 passive index funds (Total US Stock Market, Total International Stock Market, Total US Bond Market) and just tweak the allocations depending on my asset balances.
I have it in the Index Funds (VFIAX) instead of the ETF, which is 0.01% higher on expense ratio, but it allows me to have the contributions set up automatically with whole-dollar investing, so that simplicity is worth the virtually negligible expense ratio difference.
Actually I’d say the “financial planning companies” love people who pay those so called money managers fees to almost universally underperform, rather than those customers who get returns while losing minimal amounts to fees. Most of them are laughing all the way to the bank, a few are just straight up thieves (Bernie Madoffs investors thought they were “over performing” on paper). Beware any “money manager” that promises consistent over-performance. Hell, with so many online brokerages having zero commissions nowadays it’s possible to entirely avoid fees, though that would require a lot more effort to rebalance and mimick indexes. That is if someone wanted to perfectly represent an index (honestly not sure why anyone would care to be that precise, in reality anyone can just use a zero commission brokerage - do a very basic custom index with maybe 20-30 stocks across diversified areas that gets “close enough” to a market index and pay literally zero fees for that.
Some managers are worth every cent of their fee, some aren’t worth a penny. It’s up to the investor to make those trades. Low fee national companies are great if you want to ride the market up and down. What they make/don’t make in fees they make/don’t make in spreads. They are excellent for the people who don't want to or don’t know how to oversee a manager. I have had much better results with smaller local managers. They do a little better than I do myself with my 401K.
Malarkey is one of my favorite words to use thanks to Biden. Wish we could replace “come on man” with “that’s malarkey”.
The only way I would ever put my money in the hands of a money manager would be if they were willing to provide me with their own financials to reveal their personal net worth and income, so that I could determine if they actually are capable of accumulating wealth better than I am. You can absolutely guarantee they won't care about your money more than their own, so unless they can prove they are a rock star at growing their own wealth, hard pass for me. To each their own, but I suspect you may be surprised at just how much your money managers are actually costing you. Over your lifetime, it's likely somewhere between 25 - 50% of your entire potential net worth.
Maybe the 80% that aren’t beating the market can just invest in the 20% that are. Then, 100% are beating the market. This investing thing is easy. I also have tips that will result in 100% of the population having an above average IQ, but that information isn’t free.
It changes, too. The "superstar" fund manager from two years ago is often the lagging one today. The 20% that beat any given year are probably more lucky than good. I don't think anyone out there has a reputation for beating every year ... except Madoff, dude never reported a down year, IIRC.
