Hi Will,
Somehow, it doesn't seem right to attempt to explain averages to
an economics professor, emeritus but, as they say, fools rush in...
1. The averages which beat 93% of Fund Managers for the years 1995-1997 inclusive don't include loads, commissions, marketing costs, back office costs, "soft dollar" kickbacks, trailer fees, special sales incentive fees, sales training fees for seminars in tropical resorts during the winter, performance bonuses and other miscellaneous fees and transfers of wealth from the unitholders to the "professionals". When 3%+ is skimmed off the top, it becomes very difficult for funds to beat the S&P500 which doesn't have that disadvantage.
2. Though I haven't seen actual numbers, I believe that a very small number of people make abnormal profits thus bringing the average up substantially. i.e. The median gain may actually be a loss.
Here I sit waiting to be humbled, having rushed in,
Best wishes,
Ian. |
