Fidelity Contrafund started in 1990, run by then unknown manager Will Danoff. The hot Fidelity fund at that time was Magellan, managed by the legendary Peter Lynch (who was about to retire, turning Magellan over to a new manager).

Anyone with any sense in 1990 would buy Magellan, not Contrafund. Surely Fidelity would put their best manager on Magellan. The kids (Danoff was 30) ran the new funds.

Guess what happened?

Will Danoff still runs Contrafund. His last significant outperformance was late in 2007. If you look at a nine year chart (dividends reinvested), Contrafund tracks Total Market very closely.

It's much harder now to beat the market consistently. Danoff has at least been earning back his higher fees.

He's been at this for 27 years.

Can he keep it up? Will he retire? When? (He's 57.)

Let's say Danoff stays on. Then, Contrafund suddenly starts underperforming. How long will you hold on before you sell?

This has happened to lots of once famous funds. Bill Miller's Legg Mason Value Trust is perhaps the best known example. Fairholme Fund is another.

And then there's Ken Heebner. In 1997, he was the best-performing mutual fund manager over the past 20 years!

Alas, his flagship fund was closed to new investors. But then he opened a new one, intended to concentrate on his best ideas: CGM Focus.

For the next ten years, CGM Focus was the best performing mutual fund in all the land!

Amazing, right?

Want to guess what happened then?

Here's an article about it from 2012:

... its-touch/

I used to chase performance. I bought a small amount of CGM Focus when it opened in 1997. But it was hugely volatile. I couldn't handle it, and sold. I've been in and out of Contrafund. I had a small amount of Fairholme.

But I've given up. I'm convinced that it's much harder for any retail mutual-fund manager to generate alpha (that is, above market returns) today than it was even ten years ago, and certainly than it was 20 years ago. And I'm 100% sure that I, personally, do not have the ability to consistently pick managers who will perform well going forward, and (most importantly) to know to sell before they lose their touch.