One of the most common arguments I hear against passive investing (which we can define as the use of a systematic approach to gain exposure to a factor or factors) goes like this: How can good management that is “thinking” not be superior to “nonthinking” management? I have found most investors harbor a strong opinion on this question.

Fortunately, we have evidence to help settle this matter. We’ll begin with a study by Lewis Goldberg, a psychology professor, who in 1968 analyzed the Minnesota Multiphasic Personality Inventory (MMPI) test responses of more than 1,000 patients and their final diagnoses as neurotic or psychotic.

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