A good friend of mine, who posts on the Vanguard Diehards forum from time to time, and with whom I have a running email correspondence on economics in general and investing in particular, sent me the following email recently. I am posting it to see if anyone would like to comment on his dim view of the mutual fund industry.  Needless to say, my friend now has only index funds in his portfolio--no more managers!  Is he right or wrong?
Jagor

I went through an infatuation with mutual fund managers in the 70's and early 80's.  It took the crash of '87 when I lost over 50% of my investment in some funds to realize just what a bunch of phonies these guys are. 

I owned 22 mutual funds at one time and every one of my managers would have probably rated a 5 star recommendation had M* been around then.  Of the 22, only one that I can think of is still around. That's Chuck Royce of the Pennsylvania Mutual Fund.  Even with him, although I made money (on paper), I lost it all in the '87 crash. 

Another one of my favorites, Michael Price, sold his company—Mutual Series—for a billion dollars or so and like Peter Lynch got out of the mutual fund business on top.  I probably would have stayed with him since he was the best value investor around, but who knows how long he could have continued to beat the market?

I could name other fund managers who are now in the dust bin of history--along with my money.  That's the same thing that will happen to the current stable of superstars. You've already seen Bill Miller bite the dust. Others will follow.  

Jack Bogle has such an awful view of the mutual fund industry, it's a wonder they haven't tried to have him burned at the stake.