Active Investing And The Scientific Method

Recently I observed a wealthy individual choose an indexing investment strategy which I expect will underperform the actively managed alternative he was considering by about 1% to 2% per annum. Over the next 20 years, this could mean $10 million in lost income and capital accumulation. This got me thinking about the difference between two methods of decision-making: the “scientific method” used in medicine and other sciences, and the “emotional method” which is...