Index Fund Investing vs Stock Picking in 2026: The Data Still Says the Same Thing

[BretHart]

Every market cycle produces new arguments for why this time stock picking will beat index funds. AI is supposed to give retail investors an edge through better information and faster analysis. Yet the data continues to show what it has shown for decades. The majority of active fund managers underperform their benchmark index over any ten year period. Individual retail investors do worse still. The argument for low-cost diversified index investing hasn't changed because the underlying dynamics haven't changed. Markets are broadly efficient. Costs compound against you. Discipline over time beats brilliance occasionally. AI tools might narrow the information gap but don't solve the behavioural problem of buying high and selling low under stress.