[RacersEdge]

Coming from the University of Chicago - the bastion of tne free market economy thinking - I can say the idea of not being able to beat the market as an personal investor is one taught there. Things like market timing, asset allocation, etc can get lucky in the short run but have no long run validity by this theory.

But this theory rests on the idea that markets are what's called strongly efficient - i.e. all available information about a stock is alrady contained in the price of the stock - so a stock picker can have no additional knowledge over the market. Obviously, this concept is debatable. So if you buy into the idea that guys like Peter Lynch can process knowledge differently than an average person, than you might invest in his funds.

One difference though - and someone who works closer to I-banking can give more specifics - but the trading that analyst do for an I-bank is a little different than an everyday consumer trading. The professional traders are using models to detect the slightest discprepancy in prices and trading in huge volumes that would offset any transaction costs that exist. IOW, when you take a job as a trader for an I-bank, you are in a different world than going into investment management for a company like Fidelity.