"It's very difficult to beat the market when…

“It’s very difficult to beat the market when you are the market” is an old financial saying. “And since they are the market, they cannot better the market” was written in 1972 by Associated Press Business Analyst John Cunniff about institutional investors. “Pension funds cannot beat the market—they are the market” was written by Peter Drucker (1909-2005) in The Pension Fund Revolution (1976).

“It is mathematically impossible for the thirty million viewers of this show (Wall Street Week—ed.) to beat the market, since they are the market” was said in 1996 by William J. Bernstein.

Google News Archive
15 February 1972, St. Petersburg (FL) Independent, “Business Mirror: The Pros Can’t Beat The Market” by John Cunniff (AP Business Analyst), pg. 8-A, col. 1:
Why don’t the institutions do better? One explanation lies in the makeup of the market, and it behooves every small investor to understand it. On some days, 70 per cent of all trading on the New York Stock Exchange is by institutions.

This means that when one institution makes a gain it often is at the expense of another. On such days, they are “the market as a whole.” And since they are the market, they cannot better the market.

Google Books
The Pension Fund Revolution
By Peter Drucker
New York, NY: Harper & Row
1976
Pg. 70:
Indeed, what American asset management suffers from today is “excess of competition.” It has become so competitive and so volatile that the participants outdo each other (Pg. 71—ed.) in promising miracles to “beat the market” and to “beat inflation.” Both are, of course, impossible. Pension funds cannot beat the market—they are the market.

24 August 1980, Sunday Advocate (Baton Rouge, LA), “Pension funds major factor in economy” by Martin Baron (Los Angeles Times), pg. 8-C, col. 4:
It may become increasingly difficult for pension funds to do better than the market’s median rate of return. As Drucker put it in his book, “Pension funds cannot beat the market—they are the market.”

Efficient Frontier by William J. Bernstein
The Basics of Investing and Portfolio Theory (1996)
(...)
A few words are necessary concerning Lou Rukeyser’s Wall Street Week, the most widely followed piece of financial media. To quote Bernard Baruch, “something that everyone knows isn’t worth knowing.” Studies show that your long term investment returns will be almost entirely dependent on your allocation of assets among broad asset categories. Mr. Rukeyser instead concentrates almost exclusively on stock picking and market timing. To the unsophisticated investor this may seem useful. In fact, however, long term success in the former is rare, in the latter nonexistent. It is mathematically impossible for the thirty million viewers of this show to beat the market, since they are the market. The same applies to Barrons, Forbes, Money, Kiplinger’s, and all newsletters. It goes double for Dan Dorfman.

Morningstar.com—Forums
109235 03-19-2012, 5:21 PM | Post #3218853
Outstanding article. We have a saying around here that its tough to beat the market when you ARE the market. The size of some of the largest AF offerings is approaching closet indexing, and partly responsible for the style shift over the years, such as 15-25% international stocks in funds such as the Growth Fund of American, Fundamental Investors, etc. When you are that huge, you have to go somewhere with new money, but if it makes you a global fund, you need to account for that if managing a portfolio.

BloombergBusinessweek
Gross Losing to Himself as ETF Avoids Gridlock
By Lisa Abramowicz July 06, 2012
(...)
“It’s very difficult to beat the market when you are the market,” said Bonnie Baha, head of global developed credit at Los Angeles-based DoubleLine Capital LP, which oversees $38 billion. “Any choices you make will have an outsized impact when you’re smaller and more nimble. It stands to reason that there will be more opportunities that you can take and fly below the radar.”

The Motley Fool
“Where Are the Customers’ Yachts?” 2013 Edition
By Morgan Housel
May 31, 2013
(..)
But the fact remains: The huge majority of professionally managed funds will bow down to a brainless index fund over time. And it’s only getting worse. So few professional funds existed in 1970 that most could, in theory, outperform the market. Today the industry is so large that it’s a mathematical impossibility—most funds can’t beat the market because they effectively are the market.

Twitter
Tony
‏@Green_Lantern13
When you are the market you can’t beat the market. ~ Lynn Stout #RHT
9:14 AM - 30 Oct 2013

BloombergBusinessweek
Bond King Bill Gross Departs for Realm of the Unknown
By Sheelah Kolhatkar October 02, 2014
Even for observers accustomed to surprises from Bill Gross, the news that he had suddenly quit Pacific Investment Management Co. and agreed to join Janus Capital Group (JNS) was a shock.
(...)
With that much money to deploy, even Gross found it hard to move nimbly, and the fund’s returns started to fall off—as the old joke goes, it’s hard to beat the market when you are the market.