Trebor:

Is the market the best guess of optimal diversification or is an active strategy superior?  If the key is only low cost versus high cost, there is no logical reason for one to advocate an active strategy.   

I don't know if the market is the "best guess" of optimal diversification.  The market can do some dopey things, and you could find yourself buying a mess of tech stocks or tulips. 

As for costs, I would rather pay 20 or 30 basis points to have the Primecap team or Jim Barrow to pick stocks for me rather than blindly following the market.  They can buy a little more growth, value , or international, when those asset classes go on runs.  However, I view that as a personal preference. 

Petrocelli

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