One point about the index funds (besides from being very hard to beat the market even working full time on it) is that the huge fees compounding on hedge and mutual funds also take away most of your gains. 2% compounded over 30 years wipes out a lot of the alpha.

This podcast is an excellent intro to index funds and how fees decimate returns (also a fantastic entrepreneurial story): http://www.venturevoice.com/2006/02/vv_show_28_john_bogle_of...