by Michael Covel
On Monday, The Wall Street Journal reported that investors are giving up on beating the stock market…
Investors of all stripes are flooding into passive investment funds that merely track an index instead of actively trying to outperform it.
From the Journal:
“Over the three years ended Aug. 31, investors added nearly $1.3 trillion to passive mutual funds and their brethren—passive exchange-traded funds—while draining more than a quarter trillion from active funds, according to Morningstar Inc.”
That’s a massive shift in assets. And it’s happened because investors have been conditioned for years to believe the efficient market theory that says they can’t trump the stock market, so why even try.