Ah, I realise we're not exactly referring to the same thing.
We need to clarify something, and that is that those research is done through aggregating performances of lots of funds, and comparing against overall index performances over the years. For that, I agree with you, as Graham, other value investors, and researchers have shown that majority of mutual funds have been outperformed by the indices over the long run.
That does not, however, mean that all forms of active investing are inferior to passive, a point which you imply from your initial post (if you actually do not mean this, I am mistaken and I apologise).
Actually, yes that was my point. To the best of our knowledge, all forms of active investing will lose out to passive investing in the long term. There may *potentially* be new active strategies that can outperform passive investments, but as of today it is not conclusively proven yet. AND... given that there will always be people outperforming of the index, it becomes very hard (especially for the layman) to figure out whether the outperformance is due to skill or luck. Therefore, the best layman investor is best advised to be "average" and stick to passive investments.
I have come across some mention of certain active strategies that *seems* to outperform (based on gross returns) by ~1%, but when taking into account fees, expenses and taxes they underperform a passive index fund. That is the best case I have seen for active investment. Admittedly, I did not go read up on those references.
From the list of books you recommended I understand that you are familiar with value investing. However, you might want to take a look at the market wizard books, and just prop trading in general, to see that active investing can outperform the market consistently.
Anyway, there might still be further confusion. What exactly do you qualify as passive or active investing?
Here's my definitions, which I think are shared my most people:
Active Investments Concepts: Trading (on a day-to-day basis)), Speculation in stocks, Stock Picking, Market Timing, FOREX, or generally any attempt to outperform the index through superior methodology or strategy.
Passive Investment Concepts: Index Fund, Small and Value Tilting,
some forms of Enhanced Indexing (to a certain extent, I only believe in DFA Enhanced indexes, not sure about the rest like WisdomTree), Value Averaging, Strategic Asset Allocation, Rebalancing
Not Sure: Tactical Asset Allocation (it's a pseudo-active strategy) that some people use... I have no strong opinions for it because I have not come across a lot of data on this.
EDIT: Yes, Buffet beats the market... why does everyone love to use him as an example? You do know that even Buffet advises the layman investor to stick with passive index funds right? As I said before, statistically speaking, Passive trumps Active... so there will always be people who outperform the index due to luck and not skill. Now I'm not saying Buffet is all luck and no skill... BUT the question the layman would ask himself is "Do I think I can be the next Buffet?" If the person answers "Yes", by all means ago ahead and do what you will...