Active vs Passive: Gamble or Invest?

The immense market of different stocks and bonds creates a serious underwriting problem, not only for the active individual investor, but for very large companies that solely focus on this process. Assuming the active investor picks the right stock, the investor must then attempt to time the purchase and sale of this stock for maximum gains, then repeat the selection process for each additional stock then continue to make crucial market timing decisions over years and perhaps decades. Each step of this herculean process creates exponentially greater odds against optimized gains. Along the way, the brokers, dealers and investment companies profit from each trade made by the active investor by way of spreads in prices, commissions and fees for selling investment products. Active investing is an attempt to literally "beat the market". As Rex Sinquefield, Co-Founder of Dimensional Fund Advsors puts it, "If you believe in active management, you're saying that there are people who can make valuation judgments that are superior to the market."

While there are certainly examples of active investors and active professional fund mangers outperforming the markets via stock picking and market timing over short periods of time, this outperformance can most probably be statistically attributed to luck.

Oncubic follows and employs a passive index mutual fund approach as espoused by Dimensional Fund Advisors ("DFA"). As opposed to market timing and stock picking, Oncubic's portfolio strategy is "buy and hold" and encompasses the entire market. Instead of trying to "beat the market", Oncubic portfolios work with the market. Both theory and empirical studies prove that working with the market and not against the market, consistently yields greater rewards for the investor.

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