Swedroe: Take A Quiz On Who Said What

March 06, 2015

An overwhelming amount of evidence exists to clearly demonstrate that, in aggregate, active management is a loser’s game. And this is true regardless of whether markets are efficient or inefficient, or whether they are in a bull or bear phase.

 

But if the evidence doesn’t convince you, perhaps some of the market’s smartest and most-well-respected investors will. What’s more, you just may be surprised about who thinks what when it comes to indexing and passive management. Take the following quiz, and see if you can match the quote below to the person who said it. The answers appear at the end. Good luck!

 

  1. “[Investors] think of the so-called professionals as having all the advantages. That is total crap. They'd be better off in an index fund.”

A)    John Bogle, founder of the Vanguard Group

B)    Warren Buffett, chairman of Berkshire Hathaway

C)    Peter Lynch, former manager of Fidelity’s Magellan Fund

D)    Robert Arnott, founder of investment management firm Research Affiliates

 

2. “Compelling data show that nearly certain disappointment awaits the mutual-fund shareholder who hopes to generate market-beating returns.”

A)    David Swensen, chief investment officer of the Yale Endowment Fund

B)    Gus Sauter, former chief investment officer of the Vanguard Group

C)    Gene Fama, professor of finance at the University of Chicago

D)    Peter Bernstein, author of “Against the Gods”

 

3. “By periodically investing in an index fund the know-nothing investor can actually outperform most investment professionals.”

A)    John Bogle, founder of the Vanguard Group

B)    Warren Buffett, chairman of Berkshire Hathaway

C)    Rick Ferri, author of “All About Index Funds”

D)    Jason Zweig, personal finance columnist for The Wall Street Journal

 

4. “For professional investors like myself, a sense of humor is essential. We are very aware that we are competing not only against the market averages but also against one another. It's an intense rivalry. We are each claiming that, ‘The stocks in my fund today will perform better than what you own in your fund.’ That implies we think we can predict the future, which is the occupation of charlatans. If you believe you or anyone else has a system that can predict the future of the stock market, the joke is on you.”

A)    William Miller, former manager of Legg Mason Capital Management Value Trust

B)    Julian Robertson, founder and former manager of Tiger Management Group

C)    Peter Lynch, former manager of Fidelity’s Magellan Fund

D)    Ralph Wanger, former manager of the Acorn Fund

 

5. “Despite volumes of research attesting to the meaninglessness of past returns, most investors and personal finance magazines seek tomorrow’s winners among yesterday’s. Forget it.”

A)    Kenneth French, professor of finance at Dartmouth College

B)    Fortune magazine

C)    John Bogle, founder of the Vanguard Group

D)    John Rekenthaler, vice president of Research at Morningstar

 

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