Quotes in Support of Index Funds

Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals. Seriously cost matter.
—Warren Buffett, quoted in Bogle on Investing.

An out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of the guides indicated some handsome ships riding at anchor. He said, “Look, those are the bankers’ and brokers’ yachts.” The naive customer asked: “Where are the customers’ yachts?”
—Fred Schwed. Jr., Where Are the Customers’ Yachts?

For professional investors like myself, a sense of humor is essential. We are aware that we are competing not only against the market averages but also against one another. It’s an intense rivarly. We are claiming, “The stocks in my fund today will perform better than what you own in your fund.” That implies we think we can predict the future, which is the occupation of charlatans. If you believe you or anyone else has a system that can predict the future or the stock market, the joke is on you.
—Ralph Wanger, A Zebra in Lion Country

I’d compare stock pickers to astrologers, but I don’t want to bad-mouth astrologers.
—Professor Eugene F. Fama, Fortune, July 6, 1998

If Index funds look great before taxes, their performance is almost unbeatable after taxes, thanks to their low turnover and thus slow realization of capital gains.
—Jonathan Clements, Wall Street Journal, December 22, 1998

Lucky fools do not bear the slightest suspicion that they may be lucky fools—by definition, they do not know that they belong to such a category. They will act as if they deserve the money. The lucky fool [is] defined as a person who benefited from a disproportionate share of luck but attributes his success to some other, generally very precise, reason.”
—Nassim Nicholas Taleb, Fooled By Randomness

I do not believe that they (investment advisors) can identify, in advance, the top-performing managers–no one can!–and I’d avoid those who claim they can do so.
—John Bogle, Common Sense on Mutual Funds

Index funds should outperform most other stock-market investors. After all, investors, as a group, can do no better than the market, because collectively we are the market. Most investors, in fact, are destined to trail the market because we are burdened by investment costs such as brokerage commissions and fund expenses.
—Jonathan Clements, Wall Street Journal, June 17, 1997

Even in Japan, academic researchers and consulting firms have provided consistent evidence that the majority of actively managed funds fail to earn as good a rate of return as the index fund.
—Mamoru Aoyama, professor of finance, Yokohama University,
Journal of Portfolio Management, fall 1994