--- title: "Meaning & Key Takeaway of: Active management leads to lots of poor…" description: "\"Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.\" — Barry Ritholtz" image: "https://sms4smile.com/quotes/i/324/barry-ritholtz-5065_active_active-management-leads-to-lots-of-poor_541941.jpg" --- # Active management leads to lots of poor investor behavior… ![“Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.” quote by Barry Ritholtz](https://sms4smile.com/quotes/i/324/barry-ritholtz-5065_active_active-management-leads-to-lots-of-poor_541941.jpg) [Download](https://sms4smile.com/quotes/i/324/barry-ritholtz-5065_active_active-management-leads-to-lots-of-poor_541941.jpg) [Open image](https://sms4smile.com/quotes/i/324/barry-ritholtz-5065_active_active-management-leads-to-lots-of-poor_541941.jpg) > “Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.” [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Investors often chase recent winners, leading to poor decisions and underperformance. **In simple terms:** Chasing hot stocks hurts investors. Key Takeaway Avoid hype; focus on fundamentals. Themes investment behavior psychology risk Mood cautious analytical Type advisory educational When to use this quote - portfolio construction - financial planning - risk management Key Concepts behavioral finance market cycles herding short-termism Questions to Reflect On - How do you guard against following trends? - What metrics keep you disciplined? A Different Perspective Hot hand bias can cause long‑term losses if not checked. ★ ★ ★ ★ ★ No ratings yet [Active management](https://sms4smile.com/quotes/about/active-management/) [Behavior](https://sms4smile.com/quotes/about/behavior/) [Customer](https://sms4smile.com/quotes/about/customer/) [Investing](https://sms4smile.com/quotes/about/investing/) [Investor](https://sms4smile.com/quotes/about/investor/) [Management](https://sms4smile.com/quotes/about/management/) [Moment](https://sms4smile.com/quotes/about/moment/) [People](https://sms4smile.com/quotes/about/people/) ## Related quotes > [Investment performance doesn't determine real-life returns; investor behavior does.](https://sms4smile.com/quotes/nick-murray/investment-performance-doesn-t-determine-real-life-returns-investor/) [Nick Murray](https://sms4smile.com/quotes/author/nick-murray/) > [Wealth is not determined by investment performance, but by investor behavior.](https://sms4smile.com/quotes/nick-murray/wealth-is-not-determined-by-investment-performance-but-by-investor/) [Nick Murray](https://sms4smile.com/quotes/author/nick-murray/) > [Everybody has a different strategy, but everybody agrees that active management does not beat the market.](https://sms4smile.com/quotes/tony-robbins/everybody-has-a-different-strategy-but-everybody-agrees-that-active/) [Tony Robbins](https://sms4smile.com/quotes/author/tony-robbins/) > [... the best way to own common stocks is through an index fund.](https://sms4smile.com/quotes/warren-buffett/the-best-way-to-own-common-stocks-is-through-an-index-fund/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Most investors would be better off in an index fund.](https://sms4smile.com/quotes/peter-lynch/most-investors-would-be-better-off-in-an-index-fund/) [Peter Lynch](https://sms4smile.com/quotes/author/peter-lynch/) > [Index investing outperforms active management year after year.](https://sms4smile.com/quotes/jim-rogers/index-investing-outperforms-active-management-year-after-year/) [Jim Rogers](https://sms4smile.com/quotes/author/jim-rogers/) > [Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs. Empirical analyses that appear to refute this…](https://sms4smile.com/quotes/william-forsyth-sharpe/properly-measured-the-average-actively-managed-dollar-must/) William Forsyth Sharpe > [It is very hard, if not impossible," he wrote in his study, "to justify active management for most individual, taxable investors, if their goal…](https://sms4smile.com/quotes/mark-hulbert/it-is-very-hard-if-not-impossible-he-wrote-in-his-study-to-justify/) Mark Hulbert > [Active management strategies demand uninstitutional behavior from institutions, creating a paradox that few can unravel. Establishing and maintaining an unconventional investment profile requires acceptance…](https://sms4smile.com/quotes/david-f-swensen/active-management-strategies-demand-uninstitutional-behavior-from/) [David F. Swensen](https://sms4smile.com/quotes/author/david-f-swensen/) > [Active management is little more than a gigantic con game.](https://sms4smile.com/quotes/ronald-ross/active-management-is-little-more-than-a-gigantic-con-game/) [Ronald Ross](https://sms4smile.com/quotes/author/ronald-ross/) > [Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole…](https://sms4smile.com/quotes/burton-malkiel/index-funds-have-regularly-produced-rates-of-return-exceeding-those/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [I can't figure out why anyone invests in active management, so asking me about hedge funds is just an extreme version of the same…](https://sms4smile.com/quotes/eugene-fama/i-can-t-figure-out-why-anyone-invests-in-active-management-so-asking/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Active management is a zero-sum game before cost, and the winners have to win at the expense of the losers.](https://sms4smile.com/quotes/eugene-fama/active-management-is-a-zero-sum-game-before-cost-and-the-winners-have/) [Eugene Fama](https://sms4smile.com/quotes/author/eugene-fama/) > [Get inside information from the president and you will probably lose half of your money. If you get it from the chairman of the…](https://sms4smile.com/quotes/jim-rogers/get-inside-information-from-the-president-and-you-will-probably-lose/) [Jim Rogers](https://sms4smile.com/quotes/author/jim-rogers/) > [My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of…](https://sms4smile.com/quotes/myron-scholes/my-career-in-academic-research-has-not-been-involved-with-active/) [Myron Scholes](https://sms4smile.com/quotes/author/myron-scholes/) ## More by Barry Ritholtz > [Amongst the financial Twitterati, the term 'muppets' has come to describe any client used and abused by some financial predator. I've adopted the term…](https://sms4smile.com/quotes/barry-ritholtz/amongst-the-financial-twitterati-the-term-muppets-has-come-to/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [It is important for investors to understand what they do and don't know. Learn to recognize that you cannot possibly know what is going…](https://sms4smile.com/quotes/barry-ritholtz/it-is-important-for-investors-to-understand-what-they-do-and-don-t/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [The good news is that economists are intelligent, engaging and often charming folks. The bad news is their work is often of little use…](https://sms4smile.com/quotes/barry-ritholtz/the-good-news-is-that-economists-are-intelligent-engaging-and-often/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [The electronics industry expanded rapidly and the seeds for the semiconductor and software revolution were planted. The postwar period also saw the suburbanization of…](https://sms4smile.com/quotes/barry-ritholtz/the-electronics-industry-expanded-rapidly-and-the-seeds-for-the/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Footage of people camped out at Best Buy or elsewhere is not remotely a celebration. Rather, it's a reminder of just how economically distressed…](https://sms4smile.com/quotes/barry-ritholtz/footage-of-people-camped-out-at-best-buy-or-elsewhere-is-not-remotely/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Markets are frequently ahead of, and often out of sync with, the economy.](https://sms4smile.com/quotes/barry-ritholtz/markets-are-frequently-ahead-of-and-often-out-of-sync-with-the-economy/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Narrative drives most of economics. Everything seems to be part of a story, and how that story is told often leads to critical error.](https://sms4smile.com/quotes/barry-ritholtz/narrative-drives-most-of-economics-everything-seems-to-be-part-of-a/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [This ugly duckling investment will likely need time - quarters, or even years - to blossom into a beautiful swan.](https://sms4smile.com/quotes/barry-ritholtz/this-ugly-duckling-investment-will-likely-need-time-quarters-or-even/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [Yearly data put the rest of the noise into perspective. Most of the weekly or monthly random up-and-down movements get smoothed out. 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There are many ways one…](https://sms4smile.com/quotes/barry-ritholtz/asset-managers-have-different-approaches-and-i-don-t-wish-to-suggest/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [There is a shortage of doctors, and the American Medical Association is aiming to keep it that way.](https://sms4smile.com/quotes/barry-ritholtz/there-is-a-shortage-of-doctors-and-the-american-medical-association/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) > [We love a tale of heroes and villains and conflicts requiring a neat resolution.](https://sms4smile.com/quotes/barry-ritholtz/we-love-a-tale-of-heroes-and-villains-and-conflicts-requiring-a-neat/) [Barry Ritholtz](https://sms4smile.com/quotes/author/barry-ritholtz/) [Explore all 103 Barry Ritholtz quotes ](https://sms4smile.com/quotes/author/barry-ritholtz/) ## More Active quotes > [Listening is a very active awareness of the coming together of at least two lives. 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Love is not fundamentally a sweet feeling; not, at heart, a matter of sentiment, attachment, or being…](https://sms4smile.com/quotes/carter-heyward/love-like-truth-and-beauty-is-concrete-love-is-not-fundamentally-a/) [Carter Heyward](https://sms4smile.com/quotes/author/carter-heyward/) > [Studying Sol's interior by looking for analogous patterns on its incandescent face is known as helioseismology, an active - if largely unpronounceable - research…](https://sms4smile.com/quotes/seth-shostak/studying-sol-s-interior-by-looking-for-analogous-patterns-on-its/) [Seth Shostak](https://sms4smile.com/quotes/author/seth-shostak/) > [Science manipulates things and gives up living in them. 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