Plenty of smart people have really bad track records when it comes to investing. But there are more than you think that crush the market over time. Seriously, take a look at this talk by Buffett at Columbia in 1984, it is fantastic: https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/Buffett1984.pdf

You are mischaracterizing what I mean by "Dumb" money--I can see why you don't like the connotation. It's not stupid, it's just that passive investing in diversified index funds doesn't require much thought other than acknowledgement of what has worked better than managed funds in the past. It's buying asset's at any price. You are putting your life savings into something you don't understand. I didn't say it's not a good bet.

Investing is buying well, when the odds are on your side and then letting those odds bring you some luck. It's the same for real-estate, private companies and even public companies. There is no need to take issue with anything or anyone. It’s just different viewpoints that can be considered. I’m not seeing an acknowledgement of my position, which is quite ok with me, and also quite understandable on this forum. It’s hard to do, once we have our own ideas and reinforce them by declaring them over and over. I have the same problem:

https://www.cougarboard.com/board/message.html?id=23059041

Does Buffett outperform the market every year always? Nope, not always, but over time he crushes it (I already posted how BRK has crushed it). Contrarians tend to focus on downside and preservation of capital.

What does stock split have to do with anything? People evolve and no serious person is without some contradiction. Buffett's core investing philosophy of investing has not changed, where you 1) understand the industry, 2) know the durable competitive advantages are in place, 3) have strong assurance of talented and honest management and 4) buying things below intrinsic value (a range of reasonable values based on a reasonable growth rate). Those haven't changed. They will always be central to sound investing. You can't possibly have those things in an index fund. Since those things take work, that most people do not have the patience or temperament to do, they should just do index funds.

Managed Funds are hard, even for geniuses like Ackman and Paulson. I am not advocating this is the way. They are doing extremely complex things, and they don't really invest the same as Buffett. Ackman actually talks about it sometimes how hard it is when you are dealing with billions of dollars (hard to move money) and investors who have an opinion (think of Michael Burry, if you've read or seen the Big Short when his idol Greenblatt is accusing him of being dishonest and demanding that he give their money back). This is why Buffett closed his fund.

Moving Big Money
If you have ever bought an individual stock with low volume, like a penny stock... if you buy it you will influence the price, quickly. You will watch it go up as you buy. Then if you sell, you will watch the price go down just as fast. The reason is that you are the market. The shift of money into passive funds is new and it is buying companies at any price and is having a similar effect. Bulls are on parade right now, and they have been for the last 11 years. When that shifts the other way, it will create buying opportunities for those that have dry powder.

Incentives of Fund Managers
Most make money with assets under management (I hate that) and for transactions (I hate that), then they also take a performance fee (which should be aligned with investors). They do not have any real incentive to beat the market. They are making money.

Index funds are less passive than you think. The Index has a creator and someone who decides allocation.