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Rekenthaler Report

Does Your Fund Manager Consistently Beat the Stock Market?

Probably not--but you shouldn't much care.

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Year After Year
Columnist Chuck Jaffe writes of the demise of the star mutual fund manager. About that he is correct. A quarter century ago, stock fund managers festooned the covers of national magazines, and I was a hit at cocktail parties. Those days are long gone. Now managers toil in near-obscurity, and … well, I don't actually get invited to parties, but if I did, I'd be chatting with the potted plants.

The eclipse in manager fortunes is understandable. As Jaffe writes, the top U.S. stock funds once routinely outperformed the S&P 500 each calendar year. Most famously, Legg Mason's Bill Miller generated a 15-year string from 1991-2005. For its part, Peter Lynch's  Fidelity Magellan (FMAGX) beat the S&P 500 nine years straight from 1975 through 1983, often by huge margins. While those were the two most spectacular examples, many other funds enjoyed substantial winning streaks.

John Rekenthaler has a position in the following securities mentioned above: BRK.B. Find out about Morningstar’s editorial policies.