Lazy Portfolios Beat Professionally Managed Portfolios

By Scott Burns

Some things change. Others don’t.

Costs matter. This is one of the eternal verities of investing. We know this from John Bogle, the founder of Vanguard and patron saint of index investing. If we act on this simple fact— that costs matter— we can improve our investment results.

This isn’t what Wall Street tells us. The investment community tells us that only their constant attention, their cadres of MBAs and PhDs, and their special knowledge of the world can lead us to good returns. They intimate that the more we pay them, the more likely we will get superior performance. They spend millions of dollars on advertising to convince us.

Alas, it isn’t so.

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