Google "Fidelity dead investors" and you'll see a number of stories come up. The Conservative Income Investor informs that when conducting an internal performance review of customer performance from 2003 to 2013, Fidelity learned that those with the best returns were "either dead or inactive." Hedge fund manager Mohnish Pabrai refers to that study in a speech. In June, Moneyvator.com upgraded the finding's status to public, writing that Fidelity had "released a study" to that effect.
Well, maybe. My Fidelity contact has not heard of such a thing, nor has Morningstar's Fidelity Canada contact. Suffice it to say that none of these citations came linked to the original source. (Such is the Internet.)
However, the general notion is sound. As William Sharpe explained decades ago, and institutional investors have learned to believe fervently (no split infinitives here!), investing is a zero-sum game. One side wins on a trade, the other does not. More trades lead to more costs, which must be overcome by notching more than one's share of wins. Sure, that can happen. But for a great number of investors, on average? Highly unlikely.
Even if Fidelity's retail customers trade as well as professionals, and are not beaten in aggregate by portfolio managers, as a group they don't figure to overcome the friction caused by trading costs.
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