After taking risk into account, do more managers than you’d see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding 'no.'

I take the market-efficiency hypothesis to be the simple statement that security prices fully reflect all available information.

I’d compare stock pickers to astrologers but I don’t want to bad mouth astrologers.

In an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.

An investor doesn’t have a prayer of picking a manager that can deliver true alpha.

People would be a lot more skeptical if they understood that there is an incredible amount of chance in the results that you observe for active managers. So the distribution of outcomes is enormously wide - but that's exactly what you'd expect by chance with lots of active managers who hold imperfectly diversified portfolios. The really good portfolios contain a lot of really lucky picks, and the really bad portfolios contain a lot of really unlucky picks as well as some really bad ones.

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 question. Since I think everything is appropriately priced, my advice would be to avoid high fees. So you can forget about hedge funds.