The final word on passive vs. active investing The debate on active investing-stock picking and market timing-versus passive investing-markets are highly efficient and almost impossible to outperform-has raged for decades. Which side is right? In The Quest for Alpha: The Holy Grail of Investing, author Larry E. Swedroe puts an end to the debate, proving once and for all that active investing is likely to prove futile as the associated expenses-costs, fees, and time spent analyzing individual stocks and the overall market-are likely to exceed any benefits gained. The book Presents research, data, and quotations that reveal it's extremely difficult to outperform the market Explains why investors should focus on asset allocation, fund construction, costs, tax efficiency, and the building of a globally diversified portfolio that minimizes, if not eliminates, the taking of idiosyncratic, uncompensated risks Other titles by Swedroe: The Only Guide to Alternative Investments You'll Ever Need and The Only Guide You'll Ever Need for the Right Financial Plan Investors are on a never-ending search for a money manager who will deliver returns above the appropriate risk-adjusted benchmark, aka the "e;Holy Grail of Investing."e; The Quest for Alpha demonstrates that it's a loser's game-while it's possible to win, it's so unlikely that you shouldn't try.

The final word on passive vs. active investingThe debate on active investing-stock picking and market timing-versus passive investing-markets are highly efficient and almost impossible to outperform-has raged for decades. Which side is right? In The Quest for Alpha: The Holy Grail of Investing, author Larry E. Swedroe puts an end to the debate, proving once and for all that active investing is likely to prove futile as the associated expenses-costs, fees, and time spent analyzing individual stocks and the overall market-are likely to exceed any benefits gained. The book* Presents research, data, and quotations that reveal it's extremely difficult to outperform the market* Explains why investors should focus on asset allocation, fund construction, costs, tax efficiency, and the building of a globally diversified portfolio that minimizes, if not eliminates, the taking of idiosyncratic, uncompensated risks* Other titles by Swedroe: The Only Guide to Alternative Investments You'll Ever Need and The Only Guide You'll Ever Need for the Right Financial PlanInvestors are on a never-ending search for a money manager who will deliver returns above the appropriate risk-adjusted benchmark, aka the "Holy Grail of Investing." The Quest for Alpha demonstrates that it's a loser's game-while it's possible to win, it's so unlikely that you shouldn't try.

Acknowledgments xiIntroduction xiiiThe Holy Grail xivThe Quest Begins xviChapter 1 Mutual Funds: The Evidence 1When You Wish upon a Morningstar 2Focus Funds 4Active Management of Bond Funds 6Skill versus Luck 8Who Cares about the Average Fund? 12With Active Managers, How Long Is Long Enough? 12Advice from Professional Investors and Academics 15Admissions from Industry Practitioners and theFinancial Media 17Chapter 2 Pension Plans: The Evidence 23Counterproductive Activity 25The Value of Consultants 27The Performance of Funds Offered by 401(k) Plans 27Fund Selection Skills 29Please Don't Do Something, Stand There 30Advice from Professional Investors 30Admissions from an Industry Practitioner 31Chapter 3 Hedge Funds: The Evidence 33The Problems with Hedge Funds 36Advice from Professional Investors and Academics 40Chapter 4 Private Equity/Venture Capital:The Evidence 43Characteristics of Private Equity Returns 46Bias in the Data 48Advice from a Professional Investor 49Chapter 5 Individual Investors: The Evidence 51Investment Returns versus Investor Returns 54Advice from Professional Investors and Academics 56Admissions from Industry Practitioners and the Financial Media 59Chapter 6 Behavioral Finance: The Evidence 61There Is Smoke, but No Fire 62The Tyranny of the Efficient Markets 63Further Evidence 64The Failed Quest 65The Value of Behavioral Finance 66Even Smart People Make Mistakes 66Admissions from Industry Practitioners 68Summary 69Chapter 7 Why Persistent Outperformance Is Hard to Find 71The Quest for Alpha Is a Game Played on a Different Field 72Successful Active Management Sows the Seeds of Its Own Destruction 74Closet Indexing 76Concentration and the Role of Trading Costs 77The Role of Trading Costs 78Drifting Out of Small Caps 79Encore Performances 79Who Gets the Money to Manage? 81The Value of Economic and Market Forecasts 83The Value of "Expert" Judgment 86We All Want to Believe 89The Value of Security Analysis 90Buy, Sell, or Hold? 92The Hurdles Are Getting Higher 93Advice from Professional Investors and Academics 94Admissions from Industry Practitioners and Academics 96Chapter 8 The Prudent Investor Rule 103The Prudent Investor Rule 106The American Law Institute 106The Uniform Prudent Investor Act 108Chapter 9 Whose Interests Do They Have at Heart? 113Advice from Professional Investors 114Admissions from Industry Practitioners and Academics 115A Triumph of Hope over Experience 120The Arithmetic of Active Management 121The Math Is Always the Same 123The Costs of Active Investing 124The Cost of Cash 126An Expensive Quest 127Summary 129Chapter 10 How to Play the Winner's Game 133Indexing Is More than the S&P 500 Index 135Does Passive Investing Produce Average Returns? 140Enough 141Needs versus Desires 144Pascal's Wager 145Conclusion 147The Yale Endowment Fund 148The Way to Win Is Not to Play 149The Quest for the Holy Grail 150The Winner's Game 151Appendix A: Rules of Prudent Investing 153Appendix B: Doing It Yourself 159Notes 165Sources of Data 176About the Author 177Index 179