Just for completeness, re: the Semi-Strong EMH, there’s a third option – you could try to invest in stocks and beat the market yourself.

I know, I know – but before I get my hat I’d argue that there’s benefits to this approach over picking one or more active fund managers, in that your dealing charges *may* be lower than the fund’s charges (and at least they’re transparent and under your control) and also you don’t have to try to predict two potentially understandable things – a manager’s performance AND the performance of the sort of stocks he invests in (or even a third – whether he or she is going to stick around).

Of course, a tracker fund sidesteps all of this for most people to deliver better than average results compared to funds, and only slightly worse results compared to the market.

A good point to keep in mind is that even if the EMH models aren’t a perfect model of the stock market- if it is close enough that technical analysis or fundamental analysis won’t give you a real advantage then it doesn’t make sense to try them. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing presents that case very well.

-Rick Francis