Because it is extremely difficult to outperform the market averages when you need to manage and move 100s of millions. But as an individual trader is not nearly so difficult.
Because mutual fund managers are not real traders, they are handcuffed investors with no freedom to trade the right way.
lol..... You ought to try observing at a few places.....brfore you think about picking u a piece of chalk.... lol
All liquid securities are 99% efficiently priced... And, FOR PRACTICAL PURPOSES, are subject to the "random walk" hypothesis. But there are MANY complex or low volume or obscure or "uninteresting" securities... That do not draw enough attention to be efficiently priced... And where inefficienies can be exploited for profit. In no way are these 2 statements contradictory... And it constantly AMAZES me... That very, very few wannabe traders can grasp this incredibly SIMPLE fact. Once you are brainwashed by the Securities Industry... The prospect of "easy money" is just way too ** addicting **... To stop idiotic behavior like trading indices/futures... Using primitive off-the-shelf software that incorporates high school math under Fancy Names. Crack addicts sucking dick on the street for $20... Have a similar hopeless addiction... But at least they are aware of the nature of their problem.
So... 40% of mutual fund managers actually beat the S& P 500? Also, S & P 500 does not represent the entire market. It, in itself is a selection of 500 stocks in the market - made by the S & P. So technically, when you compare anyone to the S&P, you are only comparing to S & P's selection.
Don't worry about it. B schools have great students. EMH gets a lot of attention. and Lo has cracked the door open on his CMH which gets a lot of math attention. EMH just sets the scene for making money. CMH will just be a convenient price smoother. If Columbus were sailing through B School he would have loved knowing there was no edge of the Earth to fall off of. EMH really lets a person find where the pools are to extract. At B school there's never a class that doen't have a student or two who are going to hit it out of the park. They are very impatient with BS in the classroom. Since you coach in a zero net supply security, they would love to wrestle with you on the forecasting implications of EMH. You would look kinda funny after a while.
I was taught efficient market hypothesis from professors who never traded in their lives and all they did was spit out what the books said. reinforced why they were in academia
I suggest to anyone interested in EMH to obtain a 10 year time-series data set of your favorite market and calculate the distributions over different time frames. It is quite an eye-opener! At least it was for me. My analysis convinced me the market, on a single equity, while not perfectly efficient is very near that, suggesting the probability of using past historical data to develop a strategy is near zero. But do not be discouraged the market while efficient on a single name basis is rife with inefficiencies in markets of portfolios.