Only in Lake Wobegon, Minnesota (the mythical town created by the American humorist Garrison Keillor where all of the children are above average) can all investors outperform the market. The average return of all investors must mathematically be equal, before management fees and trading costs, to the average return on all investment assets. This is not a statement of the once dominant, but increasingly widely discredited, academic assumptions that markets are efficient…every time (an investor) buys an asset, thinking that it will produce relatively high returns in the future, another investor is selling that asset thinking that it will produce relatively low returns in the future. One of them is always wrong.
Bruce Greenwald, in the forward
to James Montier’s Value Investing, 2009.