[  This is a personal non-profit online research library and is solely used by Scott Bryan Hill.  Some of the links on this page lead to outside resources and the presence of these links should not be taken as an endorsement.  ]

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

( Symbol Guide )

 [ A ]

Actively Managed Funds: A Loser's Game, Gregory Baer and Gary Gensler,  "Inside the The Great Mutual Fund Trap”, BusinessWeek, October 24,2002. “This excerpt from The Great Mutual Fund Trap explains why the odds are so high against picking a fund that will beat the market.  The great mutual-fund trap, according to authors Gregory Baer and Gary Gensler, is baited by the desire for "beating the market." Investors end up paying extra fees and enduring undue risks in hopes of attaining this elusive goal. Even if investors know that most funds underperform the market over time (and the authors provide ample evidence attesting to funds' underperformance), investors tend to think they can identify those few funds that will beat the market.” (Money Management (Active versus. Passive Debate) | Investment Companies) Classic Article

Arithmetic of Active Management, William F. Sharpe, The Financial Analysts' Journal, Vol. 47, No. 1, January/February 1991. pp. 7-9. Copyright, 1991.  "Statements such as these are made with alarming frequency by investment professional.. In some cases, subtle and sophisticated reasoning may be involved. More often (alas), the conclusions can only be justified by assuming that the laws of arithmetic have been suspended for the convenience of those who choose to pursue careers as active managers." (Money Management (Active versus. Passive Debate) | Managed Money (Sharpe, William)) Classic Article

Avoiding a Bet on a 'Loser's Game', Paul B. Farrell, The Wall Street Journal, June 19, 2005.  “It's the world's biggest casino.  In Vegas? Nope. It's something a lot closer to home: mutual funds." (Money Management (Active versus. Passive Debate))

 [ B ]

Benchmark Beaters, Jonathan Butler, CBS Marketwatch, April 9, 2003.  "Over the last five years, the S&P 500 outperformed 60.2 percent of large-cap funds. Mid-cap managers took a horrific beating; only 7 of 100 surpassed the S&P MidCap 400. Small-cap managers stood taller than their mid-cap peers, but the S&P SmallCap 600 still overpowered 64.8 percent of small-cap funds.  The past three years haven't been any kinder to active managers, S&P research shows. Since March 2000, 55 percent of large-cap funds, 68 percent of mid-cap funds and 73 percent of small-cap funds fell short of their benchmark hurdles."  (Money Management (Active versus. Passive Debate) | Investment Companies)

Benchmarks vs. Stock Pickers, Barbara Kollmeyer, MarketWatch, September 19, 2006.  “As the number of international index-linked funds grows, investors have to wonder whether they need an actively managed international fund -- and the higher costs that go along with it.  Conventional wisdom holds that active management provides an edge in less-efficient overseas markets, but recent data -- and a comparison of some top funds versus their index rivals -- shows that wisdom doesn't always prove correct.  A survey from Standard & Poor's in July, comparing the two sides for the first time, found that international index funds outperform most active funds. Over five years, the Citigroup/S&P PMI (Primary Market Index) World ex-U.S. benchmark outpaced 62.5% of international funds and the S&P/Citigroup EMI (Extended Market Index) World ex-U.S. outperformed 63.3% of international small-company funds, the survey said.”  (Money Management (Active vs. Passive (International)))

Bill Miller: What’s Luck Got To Do With, Jason Zweig, CNN Money, July 18, 2007.  “The streak may be over, but Bill Miller remains the iconic fund manager of his generation. As manager of Legg Mason Value Trust, he beat the market for 15 years in a row until his run ended last year.  If you had invested $10,000 in Miller's fund in 1990, you would have $92,033 today.”  (Money Management)

Buy and Hold?  Sure, But Don’t Forget the “Hold”, Mark Hulbert, The New York Times, July 2, 2006.  “Assuming that the future is like the past, you can outperform more than 80 percent of your fellow investors over the next several decades by investing in an index fund — and doing nothing else.”  (Money Management (Active versus. Passive Debate) | Investment Companies)  Seminar Information

 [ C ]

Can Individual Investors Beat the Market?, Josha D. Coval, David A. Hirshleifer, Tyler G. Shumway, Harvard University, December 2002.  "We document strong persistence in the performance of trades of individual investors.  Investors classified in the top 10 percent place other trades that on average earn excess returns of 15 basis points per day. A rolling-forward strategy of going long fims purchased by previously successful investors and shorting firms purchased by previously unsuccessful investors results in excess returns of 5 basis points per day."  (Money Management (Active versus. Passive Debate))

 [ D ]

Do Your Homework (or Buy an Index Fund), Mark Hulbert, The New York Times, April 29, 2007.  “Don’t even consider holding actively managed mutual funds unless you’re willing to switch funds often. All other fund investors should simply buy and hold an index fund for the long term.  That’s the conclusion of a new study that has been circulating this month as a National Bureau of Economic Research working paper. The study, “Return Persistence and Fund Flows in the Worst Performing Mutual Funds,” was written by Jonathan B. Berk, a professor of finance at the University of California, Berkeley, and Ian Tonks, a professor of finance at the University of Exeter in Britain.”  (Money Management (Active versus. Passive Debate))

Don't Cling to New Mantras, Index Funds Are Guaranteed Mediocrity. Now, It's A Stock Picker's Market, Jonathon Clements, The Wall Street Journal, April 9, 2003.  "Even as Wall Street belittles your investment abilities, it also wants you to believe you can beat the stock-market averages. This, of course, is contradictory. But it is also entirely self serving. The more you trade and the more you invest with active money managers, the more money the Street makes.  Increasingly, some of the market's savviest investors have turned their back on this claptrap. They have given up on active managers who pursue market-beating returns and instead have bought market-tracking index funds.  But Wall Street doesn't want you to buy index funds, because they aren't a particularly profitable product for the Street. Instead, Wall Street wants you to keep shooting for market-beating returns. That is why you should be suspicious when you hear talk of the supposed "stock picker's market." (Money Management (Active versus. Passive Debate) | Investment Companies)

 [ E ]

Emperor's New Mutual Funds, John Bogle, The Wall Street Journal (Opinion), July 8, 2003, “Investors seem largely unaware of the substantial gap by which stock, bond and money market funds lag the returns of the markets in which they invest. While the Standard and Poor's 500 Stock Index has risen at a 12.2% average annual rate since 1984, for example, the average equity fund has grown at a 9.3% rate, only three-quarters of the stock market's return. Bond funds have earned only a slightly higher fraction of bond market returns. And yields of money-market funds are less than one-half of the current yield on short-term investments …The costs of playing the game are surprisingly large. They include mutual-fund expense ratios, which reached an all-time high of 1.6% of equity-fund assets last year. Turnover costs, by conservative estimates, total another eight-tenths of 1%, as fund sales of portfolio securities now exceed 100% of equity-fund assets. Adding the impact of sales charges, out-of-pocket fees, and other expenses, "all-in" costs for the average equity fund come to as much as 3% per year -- not surprisingly, very close to the 2.9 percentage points by which the annual returns of mutual funds lagged the stock market during 1984-2002.”  (Money Management (Active versus. Passive Debate) | Investment Companies)

 [ F ]

Failing Grade for Mutual Funds, James Glassman, The Washington Post, December 1, 2002.  “Despite the miserable performance of the stock market in recent years, the number of Americans owning mutual funds continue to rise. . . But mutual funds also have drawbacks.  First, they are expensive.”  (Money Management (Active versus. Passive Debate) | Investment Companies)

Fly Me to the Moon, and Let Me Profit on My Stocks, Mark Hulbert, The New York Times, November 19, 2006.  “The next time you’re about to buy or sell a stock, you may first want to look up — at the moon. You read that correctly. Believe it or not, the stock market tends to do better or worse depending on where we are in the lunar cycle.”  (Money Management (Correlation))

 [ G ]

Gary Gensler Sends Message Wall Street Wants Kept Quiet, Ian McDonald, The Wall Street Journal, December 23, 2002.  “Mr. Gensler, that's Gary, and Gregory Baer, Treasury officials in the Clinton Administration, have penned "The Great Mutual Fund Trap," which has a cover and contents that present the fund business as an elaborate shell game where investors pay steep fees to august fund managers and too often get market-lagging returns for their money.”  (Money Management (Active versus. Passive Debate) | Investment Companies) Classic Article

 [ H ]

 [ I ]

Indexes Tough To Beat in 2004, John Spence, CBS Market Watch, January 11, 2004.  “After more than holding their own against the benchmarks in 2003, active fund managers were left in the dust last year as stock indexes surged ahead.  A majority of active managers in eight of the nine major stock "style boxes" trailed their relevant indexes, according to examinations conducted by two fund trackers, Standard & Poor's and Morningstar.  "A lot of fund managers delivered good absolute returns, but still fell short of the indexes," said Don Phillips, managing director of investment research firm Morningstar.” (Money Management (Active versus. Passive Debate))

 [ J ]

Judging Fund Managers by the Company They Keep, Randolph, Joshua Coval & Lubos Pastor, Harvard Business School  and Graduate School of Business at the University of Chicago, November 19, 2002.  "We develop a performance evaluation approach in which a fund manager's skill is judge by the extent to which his investment decisions resemble the decisions of managers with distinguished performance records.  The proposed performance measures are estimated more precisely than standard measures, because they use historical returns and holdings of many funds to evaluate the performance of a single fund."  (Money Management (Active versus Passive Debate))

 [ K ]

Kirk Wright’s Razzle-Dazzle Play, Monee Fields-White, Bloomberg Markets, October, 2006.  “You've got only yourself to blame -- and maybe your broker, too.  Researchers are trying to get a better handle on how much money investors really make. The results? They aren't pretty.  It turns out we often fare far worse than the stock-market averages and published mutual-fund returns suggest, because we buy the wrong investments at the wrong time. For proof, consider three recent studies.”  (Money Management (Active versus Passive))

 [ L ]

Legg Mason to Cut Number of Funds, Arden Dale, The Wall Street Journal, July 13, 2006.  “Legg Mason Inc. announced a plan to streamline its mutual-funds business, reducing the number of funds across both families to 119 from 166.  The streamlining will involve merging and liquidating funds, and includes a continued rebranding of the Smith Barney and Salomon Brothers mutual funds that Legg acquired in a $3.7 billion asset swap with Citigroup Inc. Some of those funds already have been renamed the Legg Mason Partners Funds, and others will be given the name, Legg Mason said.”  (Money Management (Survivorship Bias)) Seminar Information

 [ M ]

Magellan Overpaid $330 Million:  Commentary: But It Still Can't Beat Vanguard 500 Index, Paul Farrell, CBSMarketWatch, February 21, 2003.  "This is a simple test question to see how smart you are about mutual-fund expenses.  Investors pay the Fidelity Magellan Fund $429 million annually to manage their $55 billion. In contrast, investors pay Vanguard $99 million to run the Vanguard 500 Index, also a $55 billion fund.  My question is simple: What is Fidelity doing with the extra $330 million taken from investors? Or, more accurately: What are Fidelity's investors getting that Vanguard investors aren't? That's a helluva lot of extra money.  Here's a hint: Nothing ... but I'm getting ahead of myself."  (Money Management (Active versus. Passive Debate) | Investment Companies (Fidelity Magellan))

Manager Is in a Slump (or Maybe It's Just a Phase), Mark Hulbert, The New York Times, November 20, 2005.  “Few mutual fund managers beat the stock market over the long term. That sad truth is widely understood, and it helps to account for the vast popularity of index funds, which aspire only to match the returns of a particular market.  But a new study suggests that it may be too soon to give up on actively managed mutual funds. While few managers can outpace the market as it moves up and down, year in and year out, substantial numbers can predictably outperform it during parts of the economic cycle, the study has found. And investors who are willing and able to make frequent switches among top funds may be able to make some money from this insight." (Money Management (Active versus Passive Debate))  Investing in Mutual Funds when Returns are Predictable

 [ N ]

New Kid Moves to Head of the Class, Vito J. Racanelli, Barron’s, March 12, 2007.  “When it comes to stock-picking prowess, staying atop the Wall Street broker pyramid is a tough job, akin to hand-to-hand combat. With bragging rights and lucrative trading commissions at stake, there's no shortage of rivals trying to claw their way to the summit.  That makes it all the more impressive when a discount broker like Charles Schwab, which doesn't use the traditional analyst research model, and a smaller, regional outfit like Morgan Keegan repeat as winners in our stock-picking rankings, and maintain their general dominance." (Money Management (Active versus. Passive Debate) | Investment Companies)  Seminar Information

 [ O ]

 [ P ]

Parking Not So Cheap at Fido, Erin Arvedlund, Barron's, July 30, 2003.  “That performance hurdle might make investors feel good -- creating the impression that the manager is shooting for that extra incentive. But the truth is, fund companies no longer make the hefty profits on sales fees, or "loads," or by dangling "performance" bonuses, but on the flat management fee alone. That's the flat percentage that you the investor pay just for parking your money with an "active" manager to oversee those dollars, rather than putting them into, say, a cheaper, passively-managed index fund."   (Money Management (Active versus Passive Debate))

Passive Often Beats Aggressive Investing, The Toronto Start, September 14, 2003. “Passive rarely succeeds in life except in one important area — investing. Here we believe the meek truly shall inherit the Earth.  After studying the approach for seven years we are certain that passive investing can be, for most people, a veritable temple of financial health and happiness because it is a method of building your nest egg that is cheap, stress free and time tested.  We've seen thousands of portfolios over the years. Virtually all of them were actively managed either by an adviser, fund manager or investors themselves.”  (Money Management (Active versus Passive Debate))

 [ Q ]

 [ R ]

Rewriting History, Alexander Ljungqvist, Christopher J. Malloy, Felicia C. Marston, New York University - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI), February 20, 2007.  “Comparing two snapshots of the historical I/B/E/S database of research analyst stock recommendations, taken in 2002 and 2004 but each covering the same time period 1993-2002, we identify 54,729 ex post changes (out of 280,463 observations), including alterations of recommendation levels, additions and deletions of records, and removal of analyst names. The changes appear non-random across brokerage firms, analysts, and tickers, and have a significant impact on the overall distribution of recommendations across stocks and within individual stocks and brokerage firms.”  (Money Management (Active versus. Passive Debate) | Investment Companies))  Mysterious Changes in Keywall Street Data  Seminar Information

 [ S ]

Small-Cap Funds, Rob Wherry, The Wall Street Journal,December 12, 200.  “At the beginning of this year everybody seemed to be betting against small-company funds.  After a five-year run in which the category saw average annual returns of 11% -- trailing only midcap, real-estate and energy funds -- industry experts were telling investors to take their small-cap profits and move into funds that favored larger blue-chip stocks, a category that looked inexpensive by comparison .”  (Money Management (Active vs. Passive Debate))

Surprise Hit for Small Investors, Eleanor Laise, The Wall Street Journal, August 24, 2006.  “Mutual-fund managers are changing jobs more often, and that could mean bigger tax bills for investors.  Tighter industry competition has led fund companies to give the boot more quickly to underperforming managers, while more aggressively seeking out top performers. What's more, some managers have abandoned mutual funds altogether for the fast-growing world of hedge funds, investment pools designed for wealthy investors. As of July, the average mutual-fund manager had been on the job for about 4.5 years, down from 5.3 years two years earlier, according to investment-research firm Morningstar Inc.”  (Money Management (Marketing, Taxes and Turnover))

 [ T ]

Ten Simple Rules For Fund Investors, James Glassman, The Washington Post, April 6, 2003.  "In recent years, however, my enthusiasm for mutual funds has dimmed. Most of the time, funds don't beat the benchmark indexes. A big reason is expenses. "Mutual fund managers unnecessarily increase your costs and decrease your net rate of return by more than three percent a year," writes Ron Ross in a recent book, "The Unbeatable Market" (Optimum Press). But another reason is simply that markets are generally efficient and that the majority of investors -- and experts -- just can't whip them."  (Money Management (Active versus Passive Debate))

That Star Manager May Have a Minor Role, Mark Hulbert, The New York Times, July 6, 2003.  A recent research has found that mutual fund managers have a relatively small role in their funds' performances.  That will come as a surprise to mutual fund investors who consider a fund's manager to be the primary determinant of its performance. Kunal Kapoor, editor of Morningstar Mutual Funds and associate director of fund analysis at the company, wrote in the June 21 issue that "no event generates as much angst among mutual fund investors as the departure of a successful manager." (Money Management (Active versus Passive Debate))

Think You Can Beat the Market? A Study Says 1 in 5 Can, Mark Hulbert, The New York Times, March 16, 2003.  "A new study has found that as many as 20 percent of investors may be able to regularly pick stocks that beat the market?  Most previous studies have emphasized the inability of the average investor to outperform stocks in general, though some researchers have conceded that some people can do so over a given period -- sometimes, for many years. Still, researchers have generally assumed that the percentage of investors who can do this consistently is very small."  (Money Management (Active versus Passive Debate))

 [ U ]

 [ V ]

 [ W ]

We Talked to Chuck, Investor Interview, Money Magazine, January 30, 2007.  “Buy index funds.  It might not seem like much action, but it’s the smartest thing to do.” (Money Management (Active vs. Passive Debate))

What Lurks Inside Your Index Fund, Gretchen Morgenson, The New York Times, June 15, 2004.  "The extraordinarily long and wonderfully lucrative decline in interest rates is over. Are you ready for the coming seismic shift?  Tumbling rates have kindled booms in stocks, bonds and real estate in recent years. They have also propelled shares of financial services companies, whose profits exploded as their capital costs sank. While rising rates will probably stop all of these booms, financial services stocks are particularly imperiled. And whether they know it or not, owners of equity index funds that mirror the Standard & Poor's 500 will be pained by the decline in these shares."   (Money Management (Indexing: Market Weight vs. Equal Weight))

Who Will Carry Bill Miller's Mantle?, Joanna L. Ossinger, The Wall Street Journal, December 4, 2006.  “Bill Miller's 15-year streak of beating the Standard & Poor's 500-stock index is nearly certain to end this year, and the roster of mutual funds in line to carry the mantle of longest active streak underscores what an accomplishment it has been.  Mr. Miller's Legg Mason Value Trust has beaten the index every year since 1991. With only a month left in 2006, his $20.3 billion fund trails the benchmark by nearly 10 percentage points, with a 4.5% gain through Nov. 30 versus the index's 14.2% total return.”  (Money Management (Active vs. Passive Debate))  Seminar

Why Aiming for Average Has Its Own Genius?, Jonathan Clements, Market Watch, May 5, 2007.  “Advocates of a new approach to indexing have launched a stinging attack against traditional index funds. Their chief criticism: Traditional index funds systematically overweight overvalued stocks and underweight undervalued shares. Let's face it, this doesn't sound like a good thing to be doing, and many investors in traditional index funds are understandably concerned.  Time to revamp your portfolio? Not so fast.  This isn't a column criticizing the new "fundamental" indexing. In fact, I think it is a fairly clever idea. The notion originated with Pasadena, Calif., money manager Robert Arnott and it has since been taken up by others, notably Jeremy Siegel, a finance professor at the University of Pennsylvania's Wharton School.”  (Money Management (Active versus Passive))  Seminar

 [ X ]

 [ Y ]

Yale Manager Blasts Industry, Tom Lauricella, The Wall Street Journal, September 6, 2005.  “Among individual investors, David Swensen isn't a household name. But he is an icon in the world of big institutional money managers such as endowments and pension funds." (Money Management (Active versus Passive Debate) | Financial Firms, Investment Company & Fees and Costs | Marketing (Sales)) Seminar

 [ Z ]