Generally speaking, active foundations promote their stock selection ability, especially the income level above the market average, as their goals and selling points. Passive funds (index funds) are considered to be the stupidest, simplest and rude investment and financial management model. If you copy the index and buy a little for each index stock, the income you get is the market average.
However, before Buffett's gambling began in 2005, the whole Wall Street was actually silent, and no one dared to accept the challenge. Until three years later, in 2008, Ted Stiles, the investment manager of Protti Jie Company, accepted the gambling contract. He selected five funds to compete with Buffett's S&P 500 index fund in the next 10 year.
Now, nine years later, Buffett's S&P 500 index fund returns 85.4%; In the same period, the yields of five funds under Ted Sieders ranged from 2.9% to 62.8%, with a total yield of only 22%. Sieders also voluntarily admitted defeat on May 5, 20 17. He said: "Although the gambling is still eight months away, it is all over in essence and I lost." "For investors, cost is a very important factor, which is beyond doubt."
This gamble proves Buffett's point: "Active investment management operated by professionals will lag behind amateurs who choose passive investment for many years."
Low-cost passive index funds are better than high-cost active index funds, and they are better than active stock selection in all aspects. In terms of investment, it is more important for individuals to understand their own ability circle rationally and calmly. Therefore, there must be corresponding investment methods. For example, it is a good idea for ordinary people to invest more in low-cost passive index funds.