Is investing a random chance game?

DEAR HARRY: I am not a financial person. I teach in the Philadelphia school system and I invest very carefully. I have a friend who works for a broker and sells all kinds of securities. Five years ago, we made a small bet ($100) on whether his company's selections would prove a better investment than my personal selection of index funds over a five-year period. I got his check on July 1. He had a total of gains and dividends of $31,264. My portfolio is worth $148,608 from a start of $100,000. I won by a pretty tall margin of $17,000 with very little turnover. Embarrassed, he now says that it was pure luck. What's your take on this? Do teachers have some special insight? Are index funds always better? Is it a random game?

WHAT HARRY SAYS: Sure, there's always some randomness in these investment comparisons, but you will find that index fund investing is just about equal to managed fund investing. Of course, the effect of one big winner can upset the pattern. (Look at Google and Apple.) Teachers apparently do well at investing when compared to other groups. They are ahead of financial people over the last five and 10-year periods. They also beat those in the tech industry. Why? There are no definitive answers . . . only guesses.

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