Poof! Wall Street's Sorcerers Lose Their Magic

The surest way to start a brawl on Wall Street is to say that the average money manager can be replaced--by a computer. That brickbat draws blood for a good reason: It's true. Over the years, portfolio managers have been notorious for falling behind the market indexes. The only exceptions have been a handful of stock-picking virtuosos--"market wizards"--who rode the Eighties bull market to ever-greater riches. Superstar stock-pickers such as Warren Buffett, Mario Gabelli, Michael Price, and John Neff, and futures guru Paul Tudor Jones, have long frustrated proponents of the "efficient markets" theory--which holds that trying to beat the market is an exercise in futility, since all public information is already reflected in stock prices.

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