Evil Geniuses: The Unmaking of America

by Kurt Andersen

all those smart financial professionals’ advice and judgments about what stocks and bonds to buy and sell, so-called “active management,” apparently don’t even make clients more money. In other words, much of this financial priesthood is superfluous, unnecessary. The evidence in study after study is that active management of financial portfolios by professionals “is not directly beneficial to investors on average…especially after taking into account fees.” In 2016, for instance, two-thirds of the professional portfolio managers buying and selling shares in the four hundred biggest companies did worse for their investors than if the clients had simply bought shares in all those four hundred companies. And of the pros managing investments in smaller companies, 85 percent did worse than the untouched-by-human-hands average of those stocks’ prices. Of course, that’s just their performance in one year; over longer periods of time, they do even worse.