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O ur recommendation is to drastically change your losing investment approach. There is strong evidence that the time for change is now. Currently, most investers actively manage their investment portfolios. Some pick speci c stocks and attempt to time the market with buy and sell decisions they hope will produce superior investment returns. Others delegate this investment activity and hire professional managers either directly or through the purchase of mutual funds. The question today is do you maximize your investment results with conventional active management? The answer in a word is no. Not in the past and not in the future. We have another piece of evidence showing that many are making mistakes with how they invest. It came in the form of an award to a professor who has proven active buy/sell investment management does not work. Professor Eugene Fama is a member of the faculty at the University of Chicago Booth School of Business and is known as the father of modern nance. Having published close to 100 academic research papers on nance, he is one of the most cited in the area of economics and nance and one of the most highly regarded academics. Slug Information: Lastman's Bad Boy Fama made a presentation to the Chartered Project : Mar Wk 2 Teaser AD Financial Analyst (CFA) Institute's annual conClient : Lastman's Bad Boy ference last year. CFA is a prestigious designation held by more than 100,000 investment professionFile Name : BB_Community(Flyer)_Teaser_Mar 21 als around the world, as well as active managers. Holders of the CFA designation are some of the Active investment management does not work Dollars & Sense Peter Watson Guest Contributor 21 | Thursday, March 21, 2013 | OAKVILLE BEAVER | www.insideHALTON.com most knowledgeable investment practitioners. Fama, who has consistently proven active management does not work, was asked to speak to the experts -- the CFA Institute members who manage trillions of dollars of investments and for the most part do this with active management. "After costs, only three per cent of managers produce a return that indicates they have suf cient skill to just cover their costs. (This means) going forward, and despite extraordinary past returns, even the top performers are expected to be only about as good as low-cost passive index funds. The other 97 per cent can be expected to do worse," said Fama. Can you imagine being at that conference and listening to one professor tell his audience of active managers that in effect, they cannot do their job nor will they ever be able to do their job ef ciently? Ad Size : 5.145 in x 2.857 For delivering such ain scathing research lled prePublication (Flyer) sentation: Community challenging and effectively criticizing all who actively manage Insertion Date : Mar 21, 2012 investments, the CFA Institute awarded Fama the 2012 Best Perspective Award "for the timeliest and most thought-provok- ing opinion article." Fama used the material of the CFA presentation to write an article, An Experienced View on Markets and Investing, published in the November/December 2012 issue of the Financial Analysts Journal. The challenge for us is how we use this information to improve investment performance. We suggest a complete review of your investment strategy with your adviser. During the meeting determine if you are an active or passive invester. Ask your adviser to review the difference between the two approaches either from the last four decades of academic research, Standard and Poor's history of monitoring the success of these two different approach or just the performance gures of actively managed mutual funds versus the performance of the underlying stock market index. Make sure you ask your adviser to show they are using relevant benchmarks for the comparisons. The second round of questions will be to compare the risks and returns of these two entirely different approaches and the cost associated with each, which include management fees, upfront and continuing sales fees and tax costs caused from the high turnover of active management. Invest wisely. Active management does not work. Be proactive and improve your investing success. 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