> Why would anyone take the other side of this bet? People accept this bet every single day… when they buy actively-managed funds. Actually they accept a wors

> Why would anyone take the other side of this bet? People accept this bet every single day… when they buy actively-managed funds. Actually they accept a worse bet. Instead of taking 100% downside risk and being taxed on anything above the index, they’re taxed on both gains and losses. You’re right that it’s an incredible financial instrument. Actively-managed funds are extremely profitable… for fund managers, who get paid out of investors’ assets in bad years and also get to skim off the gains in good years.