[opportune]

This is, IMO, the hardest part about the stock market to explain to new people.

I work with a guy who otherwise seems smart but who just can't wrap his head around information being priced in. His ideas are things like buy retailers right before Christmas and sell soon after, or to buy stocks in cyclical industries because they have low P/Es (at the peak of their cycle). And he is quite confused when market movements fail to match official earnings results.

The people with all the money hire the most knowledgeable/experienced people and invest in the best technology, which end up making a retail investor's ideas of why to invest in stocks look pea-brained. That doesn't mean (IMO) investing in the stock market is entirely a fool's errand for those without that info, but it does mean you should probably educate yourself (not necessarily with books - would a book enumerate all the different ways information can be "priced in"?) as much as possible and, most importantly, stay away from things you don't understand.

There is also a considerable amount of stock market results which you can ascribe to things that an AI-based trading systems, or purely fundamentals-based trading system, couldn't capture. For example if your thesis was that the Internet would grow to encompass a large part of the economy, you would have made a killing investing in promising Internet companies (post dot-com bubble :)) with a long term view and completely ignoring anything like fundamentals. But I suppose that is the difference between investing and trading.

[rtx]

It's even simpler, you need to invest in things which all of us agree too.