[mettamage]

No, the fact is: there is too little objective data to know about either side in the retail sense.

And the objective data that is there says that 1% of day traders out perform the market in the shanghai stock exchange (I could misremember).

The point is we have too little data to know almost anything.

I am on my phone no time for source finding.

[throw0101a]

> And the objective data that is there says that 1% of day traders out perform the market in the shanghai stock exchange (I could misremember).

What are the odds that you are of those 1%? (Hint: you're probably not in that group.)

Given that I have >20 years until retirement, what are the odds that I will be in that 1% for all of that time?

Further most stocks suck:

> We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251

> Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447

What are the odds that you manage to pick those few stocks that produce those returns?

[DeathArrow]

>What are the odds that you manage to pick those few stocks that produce those returns?

Aren't most of those stocks the best performers of each industry? Can you fail by buying FAANG?

[devoutsalsa]

Stocks don't go magically go up all the time. When earnings slow down, the stock stops being seen as a growth stock, and the share price stays flat or goes down. Generally speaking anyway.

[throw0101a]

Investing in technology can bite you if you invest at the wrong time:

* https://www.pwlcapital.com/investing-technological-revolutio...

* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...

AMZN dropped 90% after the Dot Com Bubble burst. TSLA in the last five years:

> In the past 5 years, there were drawdowns of 30%, 50%, -60% and -35%. This stock was down 60% in 2020! It’s up a cool 1000%+ since then.

> And the crazy thing is there were plenty of Tesla shareholders who did hold on for the entire ride. They were true believers in the face of relentless negativity about the company and its founder.

> Kudos to them.

* https://awealthofcommonsense.com/2021/10/the-10-most-dangero...

Do you have the mental fortitude to hang on during those times? How do you know when you're wrong?

> The first has to do with stock picking. Mr. Housel points out that most public companies are duds, a few do well, and a handful become extraordinary winners that drive the vast majority of the stock market’s returns. He cites data from the Russell 3000 Index that shows, since 1980, forty percent of all Russell 3000 stock components lost at least 70% of their value and never recovered.

* https://boomerandecho.com/weekend-reading-the-psychology-of-...

* Housel's book: https://www.goodreads.com/en/book/show/41881472-the-psycholo...

* https://awealthofcommonsense.com/2014/09/stocks-dont-come-ba...

FAANG may be great stocks—right now. But there are plenty of stocks that used to be great as well:

> Exxon Mobil replaced by a software stock after 92 years in the Dow is a ‘sign of the times’

* https://www.cnbc.com/2020/08/25/exxon-mobil-replaced-by-a-so...

When do you know when a stock you've pick that used to be good stops being good? IBM, AT&T, and GM were in the Top 10 of companies on the S&P 500 for decades: how are they doing now? How do you know when to jump ship?

* https://www.dimensional.com/us-en/insights/large-and-in-char...

AAPL didn't do very well in the 1990s: when would have dropped them? When should you have picked them up? (After the (in)famous Microsoft investment perhaps?)

Further, just because investing in a company on its way up may be give you good returns, does that still apply once it is at the top?

> But as massive as these behemoths became, that has not necessarily made them good long-term investments. For each decade starting 1930, 1940, 1950, and so on through 2010, the 10 largest companies at the start of the decade have made up, on average, 23.6% of the U.S. stock market. But, in the decade that followed, the average annual return of those 10 largest companies has trailed the market by an annualized 1.51% on average.

* https://www.pwlcapital.com/are-the-largest-large-cap-growth-...

Investing in the "top companies" was a fad in the past—and returns weren't necessary that good over the long-term:

* https://en.wikipedia.org/wiki/Nifty_Fifty

Owning the best stocks is hard:

* https://awealthofcommonsense.com/2021/03/owning-the-best-sto...

[mettamage]

Edit: I am a bit sad that I got downvoted. What's wrong with a contrarian opinion? I'm not suggesting we should all pick stocks. I'm saying there's not enough data to know conclusively that one couldn't outperform the market.

> What are the odds that you are of those 1%? (Hint: you're probably not in that group.)

Again, this was research on day trading (for which I didn't supply the source, sorry for that). It was not about buying and holding with at least for a 5 year horizon. That's what I meant with we have too little data. Day trading is not investing.

> What are the odds that you manage to pick those few stocks that produce those returns?

As I've learned with poker: only play on tables where you see fish. Which translates to: only play games that you are sure that you can win. The hard part is to not enter any games that you're not fully sure about of winning. And yes, there are not many games that you can win at all. But when you see one, you go at it aggressive and win. It's easier to say than to do it (based on my poker experience).

I'm not saying that people can beat the market. But I still believe even after all this that it's hard to say that people aren't beating the market. We need data of actual accounts over long time horizons. IMO that's the only way that question can be answered. Unfortunately, that's unrealistic since it's a feature that the stock market is anonymous and private to other market participants.

I feel there's a feedback loop going on where everyone echoes each other that you can't beat the market. And I feel that echo is stronger than the actual evidence. Don't get me wrong, the evidence that I see is quite compelling. But it isn't foolproof and it has many gaps. It's about as compelling as the efficient market hypothesis. Yes, in general markets are efficient, but why does it take 5 to 15 minutes for information to be incorporated into a stable price? That means if you'd trade at minute 2, you're almost guaranteed to make money [2]. I don't have sources for this, but these are my observations. This is even more true in the crypto markets where academics are saying that markets aren't fully efficient.

The only thing I can say with regards to the whole "you can't outperform the market" rhetoric is this: if you want to invest safely, then don't try to outperform the market. There is enough research that it's a dangerous endeavour. So is starting a startup (from a financial standpoint). However, that doesn't mean it's impossible to outperform the market, or create a great financially successful startup for that matter.

[1] According to Graham, he mentions it in his book The Intelligent Investor.

[2] Every time when I look at day price information and see a news event priced in, I notice it takes at least 5 minutes in many cases. It's never instant.