> Warren Buffett Blog: Its not easy to beat the market

Tuesday, May 30, 2017

Its not easy to beat the market

If you take half the people in the country and they don't do anything, they just own the average, they are going to get average results, right? If they don't have expenses they will get growth from that. The other by definition average, the other part average left for them, they are going to incur all kinds of fees and they are going to do way better – way worse than the people in the -- who do nothing. And I made this bet in order to just illustrate. The difference is incredible. The amount of money people wasted getting investment advice is just ridiculous in this country.

Only a handful of active investors beat the market
I've known 10 or so people with modest amounts of money, I would bet a lot of money that they would do better than average. And I say that there are hundreds, maybe even thousands. But there's thousands, and thousands, and thousands and thousands of hedge fund managers charging two and twenty is just ridiculous. And you don't get better because you charge a lot. I mean, that does not make you a better judge of securities or anything like that. And so the good salespeople, overwhelmingly, are the ones that attract the money, rather than the very few who are extraordinary at managing money. Phil Fisher, who wrote that book Common Stocks and he was going to do better than average. Charlie was going to do better than average in life in investments. Bill Ruane, a friend of mine, was going to do better. There have been a few. But there are very, very few. And then only if they work with fairly modest sum of money.