If we observe the performance of only those funds that remain active, we will tend to find that the average performance of the surviving funds exceeds that of the market.

The New Finance focused on the market's major systematic mistake. In failing to appreciate the strength of competitive forces in a market economy, it over estimates the length of the short run. In doing so, it overreacts to records of success and failure for individual companies, driving the prices of successful firms too high and their unsuccessful counterparts too low.

In going directly to Investment Heaven, you build your portfolio as you would build a wonderful company through a merger and acquisition program. You specify the way you want your portfolio to look, and then you assemble the profile piece by piece by bringing together companies that make their own individual contributions to the desired character.

Although efficient markets people still go around saying there is a "mountain" of evidence supporting their hypothesis, the truth of the matter is that it's a very old mountain that's now eroding rapidly into the sea.

So you see, in the end, it is nearly certain that the power of prediction must triumph over the arrogance of elegance.

The cheaper the stock, the better the outlook for future returns.

If we observe the performance of only those funds that remain active, we will tend to find that the average performance of the surviving funds exceeds that of the market.