
It’s mathematically impossible for active investors to beat the market - azumbeg
https://medium.com/@azumbeg/its-mathematically-impossible-for-active-investors-to-beat-the-market-1a7dc90de310
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KuriousCat
It is because you assumed it to be the case. What is the basis for the
equation where you considered t _active + (1-t)_ passive = market gain? When
are passive and active gains not equal with your definition?

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azumbeg
They are always equal with my definition, hence the conclusion that active
investors, as a whole, perform substantially worse than the market (net of
fees). The equation is derived from the fact that there are fundamentally two
investing strategies. There's a passive strategy, where an investor holds a
representative market index. Anything that deviates from that strategy (with
regards to security selection or market timing) is considered an active
strategy. "t" is used to denote the share of capital flowing to each strategy,
and the total market return is the weighted return (percentage, not absoute)
of both.

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ironmagma
That’s a tautology. On average, people can’t do better than average.

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azumbeg
Good point. But it's missed on a lot of people.

