Beating the stock market isn’t easy. Many Canadian investors act like it is

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Studies show only a tiny minority of elite investing professionals can outperform the market with any kind of regularity, in Canada or elsewhere

is quite difficult. While this may strike some readers as rather obvious news, Canadian investors still mostly entrust their money to stock pickers and market timers.

Dave Ramsey, an American financial guru with one of the country’s top talk radio shows, recently told his millions of listeners: “It’s not really hard to beat the S&P . The S&P is the average of the market.” So, all you have to do is be better than average. While this kinda sorta sounds like it makes sense, it is absolutely false.

A global movement has grown around a passive approach to investing championed by the likes of Vanguard, BlackRock, and State Street, and facilitated by the rise of exchange-traded funds. The three companies now control a colossal US$20-trillion in assets under management, as investors have gravitated to a style of investing that seeks to emulate market returns while minimizing costs.

Many have heeded that advice in the U.S., where the passive space is on the cusp of assuming a dominant market share.

 

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