Scan the financial headlines and each day you can find plenty of press on supposed stock market prophets who have found “under-priced” stocks and have taken advantage of them. Anyone who has a career as a stock picker thinks they can do this, and everyone wonders why they can’t be the next Warren Buffett. As pointed out in this article, an important fact to consider is that just 4% of actively managed stock funds outperformed the S&P 500 in each of the past four years. In “Can You Pick the Guys Who Pick the Guys Who Pick the Best Stocks?” Jason Zweig does a wonderful job of illustrating the challenges inherent in such approaches to investing.
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