It seems pretty easy to pick individual stocks, for instance. You might think you can rely on technical analysis and solid fundamentals, and that picking the next 10 or 100xer can’t be that hard if you truly understand things.
But as most astute investors come to realize, Mr. Market is an amalgamation of everyone, and that can be unpredictable. Fundamentals and technicals are irrelevant. The market is a random walk.
Consistently beating the market is hard. We’ll cover that more below. Consistently beating the market after fees is really hard. If fees aren’t involved, beating the market is possible. Not easy. Certainly not guaranteed. But possible.
You might think at this point: Without fees, 50% of stockpickers would beat the market and 50% lose to the market. That’s a logical conclusion, assuming that stocks’ performances follow a normal distribution, also known as a bell curve.
You’re simply picking random numbers. Sometimes your numbers will cause you to win. Most of the time, you’ll lose. This is reminiscent of the parables of monkeys throwing darts.