The Stock Market, Investments, and Investing Thread
It would be difficult for any active mutual funds to beat their benchmark on a consistent basis. Mutual funds are regulated and required to be diversified.

"The Investment Company Act of 1940 limits how much a diversified fund can invest in any single stock. Under the act, out of 75 percent of a mutual fund’s assets, 5 percent or more cannot be invested in a single stock. The fund is also prohibited from acquiring in excess of 10 percent of a single stock’s outstanding voting securities."

Many mutual funds will hold 40 or 50 stocks. They also end up buying a lot of stocks from whichever index they're benchmarked against and they just end up mimicking the return of that benchmark. Except you just end up paying extra fees to the Mutual Fund manager or whatever sales asshole sold you the fund.

To beat the market, you have to take more concentrated positions or take bets with low cost but a possible high return.

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RE: The Stock Market, Investments, and Investing Thread - by Bud Fox - 09-10-2020, 10:51 PM

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