All part of the industry. Out of a bunch of mechanical stock selection methods use the ones that have provided the most historically as a sales pitch for 'average' historic stock gains (Dow and Jones for instance devised three indexes, the best of which has been adapted and transformed into what many now refer to as being the historic average). Had all three indexes been equal weighted initially then that collective set might have lagged the best case by around 2%. Instead of 10% for the best case, 8% for the average case.
Ignore the costs of inflation (loss of purchase power), as historically that knocked nominal gains down by around 4%.
Ignore the cost of taxes/fees. Which might eat perhaps around 20% to 35% out of nominal gains. Even if nominal gains just paced inflation, you're still taxed on that 'gain'.
Encourage investors to profit chase and trade - to buy when high and rising, sell when fallbacks/low. Such trading can eat around 2%.
Collectively that can be sold as a 'look - historically stocks have provided 10% nominal gains' and some might even include the effects of inflation and add '...and after 4% inflation that left you with 6% real gains'. Knowing that for the average punter their actual outcome will be significantly less - perhaps not even keeping up with inflation. Their loss is someone else's gain.
If instead you use a diverse range of low cost, tax efficient choices as your candidate holdings, and add-low/reduce-high trade (AIM), then you're more on the other side of the fence ... and more inclined to actually achieve the sales pitch "average" in practice. Others however might look at that and say '..well you only just paced the average anyway so I can't be bothered with that ... I've been sold this product that is expected to do better' .... You can lead a horse to water .....
AI
