Earlier this month, I was invited to make an appearance on CNBC's "The Closing Bell" to discuss the topic "Is this the end of a stock picker's market?" I enjoyed the lively debate with Ross Gerber and Evan Newmark. In case you missed it, click the video link below. Since one can only say so much in a 4 minute segment, I'd like to share some additional thoughts with our loyal Runnymede readers.
Many articles have been written about the shift from active to passive investing. The thesis is simple. The majority of active mutual fund managers underperform their index and also charge a higher fee. This is a double whammy for an investor's bottom line. Therefore, the solution seems simple: move your money into low cost index funds and that should lead to higher returns over the long term. Unfortunately, it's not that easy. Let's take a look at the potential pitfalls of passive investing.