“An investor who does not understand the economics of specific companies but wishes to be a long-term owner of American industry,” he says, should “periodically invest in an index fund.” In this way, “the know-nothing investor can actually outperform most investment professionals. Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.” Money invested for the long term, like the proverbial plodding tortoise, wins the race over speculative money, analogous to the fits and starts of the hare. The mutual fund industry is ignoring this truism.
