By any measure, 2013 looks set to be another great year for stocks. In fact, if the final three weeks go well, it could the best 12-month jaunt for the large cap benchmark index SPDR S&P 500 ETF Trust (NYSEARCA:SPY) since a 31% gain in 1997.
While those kind of profits are sure to delight most investors, the truth is many people simply won’t get them. In fact, studies show that up 75% of professional money managers lag their benchmarks over time simply because they actively try to beat them. As odd as it sounds, had they done nothing they’d probably have been better off.
“It’s not unusual for indexes to outperform the managers consistently over time,” says Hugh Johnson of Hugh Johnson Advisors in the attached video. “You’re not going to find from me an argument against indexing, by both professional or large investors, as well as small investors.”
And he’s not alone. The indexing trend has been growing and gaining converts since 1975, including such big names as Berkshire Hathaway billionaire Warren Buffett.
You can see the full “Breakout” interview below: