7(A) On average, actively managed funds do worse than passively managed funds do.

I have heard this before, and I'm still confused about it. They would need to do all the work of obtaining good evidence entangled with reality, and processing that evidence coherently, just to anticorrelate that reliably. Why aren't there actively managed funds that hire people with MBAs and ask them which stocks to buy, and then do the opposite of whatever they say?

I have a few theories. One is that short selling is difficult, so you can't make money as easily by predicting a stock price dropping as you could by it rising. As a result, predicting it dropping pays less, and is easier to do. Actively managed funds can therefore predict it, and use this to consistently lose money.

Another one is that actively managed funds are more open to embezzlement, and that a few companies claiming they bought different stocks after the fact managed to drive down the average enough to make it statistically significant.

There's also the whole thing about the market not being quite efficient. If you can outperform the market, you can use the same strategy with more money in order to make more money, up until you start trying to buy and sell enough stock that you actually change the market. As a result, the people who are best at predicting the market will control it, and it will be efficient. But it has to be just inefficient enough to pay them enough to keep doing it. The same amount of money would have to come from other people trying to predict the market and failing. As a result, an average person would have a small expected loss that goes to those people, and if the actively managed funds are just hiring average people, they'll lose money.