I Don't Care Who Writes A Nation's

Anyone With Special Abilities Earns A Differential Return On That Flair, Which We Economists Call A Rent. Those Few With Extraordinary P.q. (performance Quotient) Will Not Give Away Such Rent To The Ford Foundation Or The Local Bank Trust Department. They Have Too High An I.q. For That.

An American Economist Of Two Generations Ago, H. J. Davenport, Who Was The Best Friend Thorstein Veblen Ever Had (veblen Actually Lived For A Time In Davenport's Coal Cellar) Once Said: "there Is No Reason Why Theoretical Economics Should Be A Monopoly Of The Reactionaries." All My Life I Have Tried To Take This Warning To Heart, And I Dare Call It To Your Favorable Attention.

Still, I Figure We Shouldn't' Discourage Fans Of Actively Managed Funds. With All Their Buying And Selling, Active Investors Ensure The Market Is Reasonably Efficient. That Makes It Possible For The Rest Of Us To Do The Sensible Thing, Which Is To Index. Want To Join Me In This Parasitic Behavior? To Build A Well-diversified Portfolio, You Might Stash 70 Percent Of Your Stock Portfolio Into A Wilshire 5000-index Fund And The Remaining 30 Percent In An International-index Fund.

Even Fans Of Actively Managed Funds Often Concede That Most Other Investors Would Be Better Off In Index Funds. But Buoyed By Abundant Self-confidence, These Folks Aren't About To Give Up On Actively Managed Funds Themselves. A Tad Delusional? I Think So. Picking The Best-performing Funds Is 'like Trying To Predict The Dice Before You Roll Them Down The Craps Table,' Says An Investment Adviser In Boca Raton, Fl. 'i Can't Do It. The Public Can't Do It.'

The Stock Market Has Predicted Nine Of The Last Five Recessions.