Thus, if there is skill in stock picking, we should see some persistence in fund performance. However, a generation of empirical work found no persistence at all. Funds that did well in the past were no more likely to do well in the future.and
Since the average fund underperforms the market, and fund returns are not predictable, we conclude that active management does not generate superior performance, especially after transaction costs and fees. This fact is surprising. Professionals in almost any field do better than amateurs. One would expect that a trained experienced professional who spends all day reading about markets and stocks should be able to outperform simple indexing strategiesWhy the hell do people keep on putting their money in? There are virtually no transaction costs associated with looking up this information. It's even on Wikipedia. Where is the rationality?