That’s the conclusion of “The Incredible Shrinking Alpha,” a new book by Larry Swedroe, chief research officer for Buckingham Wealth Partners, and Andrew Berkin, head of research at Bridgeway Capital.

How bad is it? S&P Dow Jones Indices has studied active managers for many years. Last year, they noted that after 10 years, 85% of large fund managers underperform their benchmark (usually the S&P 500), and after 15 years, that underperformance reaches 92% of managers.

That is a very bad record!

The Wall Street Journal recently ran an article that asked, “Do You Know the Difference Between Being Rich and Being Wealthy?” The piece focuses on a new book by Morgan Housel called The Psychology of Money.

This article brought me back to years ago when I read The Millionaire Next Door by Thomas Stanley and William Danko. This book basically validated my dad’s approach to money and gave both me and my sister our road map toward our own financial futures. Now as a financial adviser for more than 35 years as well as the father and father-in-law to three adult children, it has been my life’s mission to spread the gospel.

I am really enjoying reading Morgan Housel’s thoughts on money. The quote that struck me this week is from an interview he gave in a press tour for his new book, “The Psychology of Money”. Reilly’s rules – Keep your emotions in check.

Behavior is the most important side of investing. You can be the best stock picker in the world, have the most sophisticated economic forecast and models – be a financial genius – but if you don’t control your own relationship with greed and fear, your ability to take a long-term mindset, whom to trust, and how gullible you are, then none of those financial skills will matter.

– Morgan Housel

In this episode of The Acquirers Podcast Tobias chats with Larry Swedroe. He’s the author of a brand new book called The Incredible Shrinking Alpha. He’s also the Chief Research Officer at Buckingham Wealth Partners. During the interview Larry provided some great insights into:

Alpha Becoming Beta
The Pool Of Victims Is Shrinking
Is This The End Of Active?
New Book – The Incredible Shrinking Alpha
Active Versus Passive Investing
The Paradox Of Skill
Passive Increases Market Efficiency
What Should Individual Investors Do?
The Biggest Mistake Investors Make