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2. You don’t need to be brilliant to beat the market (even after fees). I agree that you need to put a ton of work and research into it, but to say only geniuses can beat the market is absurd.

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this is my problem with the manager selection/stock market beating issue. by how much can you be expected to beat the market? and how much additional work is required for that gain? what is the risk adjusted return you expect to generate over time and for how long will you need to do that work to generate those returns?

i don't think (with my current level of knowledge and research on the subject) that the trade off is worth it.

your time can be better spent, and more highly rewarded elsewhere.

alpha is zero sum and hard to find.

anyways, as to your initial point, i certainly agree. stating that only geniuses can beat the market is indeed absurd.

i can prove this by assigning the market to mean either the S&P500 or some other composite market cap weighted index of stocks. if you can work your ass off and identify 1 likely underperformer, you can beat the market. that strategy doesn't take a genius, just a lot of work for mininal excess return.

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The biggest reason why the average investor (assuming he has average intelligence) fails to beat the market is a lack of patience.

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...and work.

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There was a post a week or two ago regarding how important the behavioral impacts of investing are and truer words were never spoken.

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can you link that post? i have a vague memory of it and would like to re-read for this discussion.

thanks,
Barron

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I'll respond to your earlier post regarding my first point later tonight when I have some time. But I agree with what you said in this post. I was referring to investment managers/professionals with my 2nd point. It is generally a waste of time for people not in this profession to research on their own (unless they feel it's enjoyable). I think it would be fair to say that an average investor has little chance of beating professionals due to the time involved (professionals spend upwards of 55-80 hours a week trying to beat an index by a few basis points).

Edit: Barron, if you have time check out the book Black Swan by Taleb.