Yes, You Can Beat the Stock Market This 2023

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.

“You cannot beat the market!” You hear this warning all the time. But as we peel back the onion on this advice, we face two logical problems.

Myth: “Nobody Can Beat the Market”

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This myth is silly. Thousands of people beat the market every day, every month, every year. Some investors have beaten the market for decades. Anyone who says otherwise is misinformed.

Consistently beating the market is hard. 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.

Truth #1: It’s hard…

But when someone else is managing your money for you, they’ll charge you a fee. That fee eats your profits. And since those profits have been eaten, beating the market becomes harder.

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.

Truth #2: It’s Not 50/50…

But equity returns do not follow a normal distribution! This is an interesting and exciting fact. Instead, they more closely follow a long tail distribution. Most individual stocks perform worse than average, but a small number of high performers beat the average.

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