Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market – but in the process, they risk under-performance. For example, the McMillan Shakespeare Limited (ASX:MMS) share price is down 49% in the last year. That contrasts poorly with the market decline of 7.2%. To make matters worse, the returns over three years have also been really disappointing (the share price is 44% lower than three years ago). More recently, the share price has dropped a further 9.4% in a month. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
View our latest analysis for McMillan Shakespeare
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect