Passive management is the opposite of active management. It means that investors don't try to augment the portfolio. This form of investment management holds fast to the principles of sound rational investing. Active management, on the other hand, is a more practical approach that treats a portfolio with a more attentive approach that seeks to make adjustments on an ongoing basis. Note, most economists believe under the tenets of rational investing that passive management is the way to go. Active management seeks to work at making a portfolio better and ultimately justify administrative expenses and their jobs of doing so.

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