Mutual Funds for the Utterly Confused: Before the Index
Consider this: “The “Efficient Markets Hypothesis” was made famous by Eugene Fama (1970) and later connected to the rational expectations hypothesis of New Classical macroeconomics. It did not please many practioners. “Technical” traders or “chartists” who believed they could forecast asset prices by examining the patterns of price movements were confounded: the EMH told them that they could not “beat the market” because any available information would already be incorporated in the price. It also had the potential to annoy some fundamentalist practioners: the idea of efficient markets rests on “information” and “beliefs”, and thus does not, at least in principle, rule out the possibility of speculative bubbles based on rumor, wrong information and the “madness of crowds”.
Fama made his observation based upon the work of Holbrook Working (1934), whose field of expertise as an econoist focused on a variety of price series, Alfred Cowles (1933, 1937), who published “Can Stock Market Forecasters Forecast?”, 1933, Econometrica was a student off American stock prices and the investors who followed them and Maurice G. Kendall (1953) who followed much of the same path of studies but did so for British stock and commodity prices. To these men, whose findings did not sit well with investors or those who thought the could forecast market direction, it seemed as there was no correlation between successive price changes on asset markets. 
Keep in mind, there were no real securities regulations protecting investors at the time these three men published their thoughts. These were the early days of financial theory. Investing was largely based on intuition which made the work of pioneers like Louis Bachelier (1900) easy to dismiss.
Remember also, this was before Keynes (specializing in theories about hedgers and speculators and futures contract pricing), before Graham (who focused famously on finding value), before Markowitz and Tobin (who, according to The New School did their work as they estimated “the benefits of diversification would require that practitioners calculated “the covariance of returns between every pair of assets”), before Modigliani-Miller (who focused on the underlying assets of a firm) and before Paul A. Samuelson (1965) and Benoit Mandelbrot (1966) (who proved that financial markets did not work according to the laws of economics).
Cowles believed that the stock market was simply too difficult of an environment for any one investor to fully grasp, let alone profit successfully from. He developed the Cowles Commission Index, the first index fund but, without the use of computers to help, the fund drew only a few adherents. But the fund still exists today as the Standard and Poors 500 Index.
