1. The S&P 500 Index consistently outperformed 98% of mutual fund managers over the past three years and 97% over the past 10 years, ending October 2004. In two 30-year studies, the S&P 500 outperformed 97% and 94% of managers. In addition, only about 12% of the top 100 of managers repeat their performance in the following years. Therefore, it is not possible to consistently pick next year’s hot mutual fund manager.
2. Over fifteen years to 1998, on a pre-tax basis the Vanguard S&P 500 index fund outperformed 94% of general equity mutual funds and 97% on a post-tax basis. The post-tax average difference in annual performance was 4.2%.
~From Common Sense on Mutual Funds, by John Bogle
Bottom Line: If you scored at the 97% level on the LSAT (score of about 169-170), I think you'd feel pretty good, especially if you didn't even have to study too hard (like index investing). On the other hand, if you paid a test preparation company thousands of dollars (like a mutual fund manager or investment advisor) and got a score far below the 97% percentile (which you pretty much could have gotten on your own for free), I think you'd feel pretty bad.