Perhaps you’ve heard that roughly three-quarters of all mutual funds lose to the market over the long run. The question is why — why do presumably smart and talented managers serve you worse than simply buying an index fund? Believe me, I’ve met plenty of fund managers, and the vast majority of these folks are talented and responsible and hard working — they’re not bad stock pickers.
The best explanation I’ve found comes from a recent study by professors Cohen, Polk, and Silli. Their study, “Best Ideas,” provides pretty convincing evidence that the rules are stacked against smart fund managers. Their few very best ideas do perform well — beating the market and their other picks by approximately 1% to 4% per quarter (which is significant). However, the very nature of a mutual fund requires managers to pick dozens — perhaps hundreds — of stocks.
Nowadays, stock market today is growing every day. It will become bigger and then we realize that stock market is an interesting business. We can find that many people want to join this business because the profit is so good. We can get a lot of benefits when we can win at this ‘challenge’, but remember; firstly you must to know the role play when you decide to join at this area. Besides that, we also have to know and understand well about this term. Then, we have to prepare ourselves to face, fight and then solve or overcome the problems and obstacles occurred in this area. So, in the future, we gain can the success easily.