When it comes to investing, it's a losing proposition to try and be anything better than average. I was recently reminded of this important investing precept when I attended a presentation by Ken French, a noted professor of finance at Dartmouth College.
"The theory is, institutions are smarter than 'dumb' individuals and can add value," French said. "That is simply not true."
His research has found that institutions are no better at trying to beat the market than individual investors. When you pay someone to do better than the market, French told us, "You should expect to lose. It's really hard to identify the great managers. You are wasting your time and money trying to beat the market."