The Old World focus was on beating "the market" through finding mispriced securities and actively trading them.
Wall Street and associated insiders had information and technology advantages that allowed them to leverage their scale and talent.
Then came the personal computer and the internet - both of which largely leveled the playing field for all. Once information was open and accessible the opportunities for identifying mispriced securities diminished.
Investment sales people still want you to believe they can outsmart the market. The problem is finding someone who does so consistently.
Some show short term success but how do you determine if its luck or skill?
And to make matters worse - by the time you discover someone who might exhibit skill - it may be too late. See the best stock fund of the decade article as a great example.
Research consistently reveals that in trying to outsmart the market, most investors underperform their investments and further most investments underperform their benchmarks.
Dalbar publishes an annual study called QAIB (Quantitative Analysis of Investor Behavior). The report tracks money flows and consistently reveals our behavioral biases. Money chases performance and consequentially buys investments when they look their best and sell them when they look their worst.
In the new world of market efficiency, your more likely to find performance by minimizing mistakes managing behavior and the safe pursuit of your goals. A good process and discipline can help you avoid chasing your tail.
See: Investment Philosophy
See: Nick Saban
Think About it.
"Unless an investor has access to 'incredibly high-qualified professionals,' they should be 100 percent passive -- that includes almost all individual investors and most institutional investors."
--David Swensen - CIO Yale Endowment