> How can an industry that does no better than chance on average continue to exist?
Are you asking why people invest in equities? It's because the market as a whole grows over time, sometimes as high as 15% but at present about 4% after taxes, fees and inflation. This means a buy & hold investment returns a reliable long-term averaged 4%, at a time when virtually no other investment can offer that kind of return (when expressed in the same way).
The above is true if one simply invests in an index fund that tracks (for example) the DJIA, and no trades are made -- no brokerage fees, no taxes until a redemption takes place, and lower taxes than for regular income.
Or are you asking why people have managed portfolios? It's because of widespread ignorance and a bit of the cowboy mentality -- a real cowboy would throw the dice instead of playing it safe. But "throwing the dice" in equities is easily shown to be a foolish act, historically, statistically, and reliably.
You are correct in your second guess: why managed funds. And I am tempted to agree with you. It just seems like eventually the truth would out and, what essentially amounts to a scam would stop being able to attract customers.
Are you asking why people invest in equities? It's because the market as a whole grows over time, sometimes as high as 15% but at present about 4% after taxes, fees and inflation. This means a buy & hold investment returns a reliable long-term averaged 4%, at a time when virtually no other investment can offer that kind of return (when expressed in the same way).
The above is true if one simply invests in an index fund that tracks (for example) the DJIA, and no trades are made -- no brokerage fees, no taxes until a redemption takes place, and lower taxes than for regular income.
Or are you asking why people have managed portfolios? It's because of widespread ignorance and a bit of the cowboy mentality -- a real cowboy would throw the dice instead of playing it safe. But "throwing the dice" in equities is easily shown to be a foolish act, historically, statistically, and reliably.