Mike Travaglini is the executive director of the Massachusetts employee retirement system-one of the largest pension funds in the country. Pension funds of this size have huge staffs of very smart analysts searching the world for the most talented investment managers. They had hired Bill Miller of Legg Mason, manager of the Value Trust Fund which had beat the S&P 500 for 15 consecutive years. They fired him in 2006 after his luck ran out and "...decided to get out of actively managed U.S. stock funds and stick with passively managed funds..." Mike Travaglini went on to say "The extra cost to hire a money manager didn't seem worth it." "If Bill Miller can't do it on a consistent basis, then nobody can".
If you think you or your investment advisor are smarter than Bill Miller and have as much information as Bill Miller and can actively manage assets to beat the market, then go for it. It goes without saying that Bill Miller at one time could pick up the phone and talk to the CEO of any major company in the U.S. Do you or your advisor have that kind of access?
The end result is that, according to an article on the front page of the Baltimore Sun today, Legg Mason is making major cuts in its work force.
This is just another piece of evidence supporting the thesis that individual investors should go with low cost index funds and stop paying self proclaimed "gurus" excessive fees to try to beat the market.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.