Time — In 1962, a government study of mutual funds revealed that they were, on average, average, or worse. This was an affront to many on Wall Street who assumed that, of course, professional investors beat the market. It was left to legendary investor Benjamin Graham to explain in a speech to securities analysts that “neither the financial analysts as a whole nor the investment funds as a whole can expect to ‘beat the market,’ because in a significant sense they (or you) are the market.”
At the time, the pros controlled only 15% of the U.S. stock market (the figure is now more than 60%). But they did the bulk of the trading. They moved the market. And therefore they could not, as a group, beat it. The mutual-fund industry’s attempts to move this boulder by taking bigger risks ended badly. When the stock market plunged in the 1970s, the funds followed
