[halpmeh]

That’s not a good example because the expected value of your returns is less than the market returns. Only rubes would invest in such a scheme.

A better example would be to create the S&P 499. Take the S&P 500 and remove one company you think most likely to underperform. Theoretically you’d outperform the S&P 500.

In the short term, I think you’re right. However, 20 years is a really long time. You’re not going to make a bet at year 18 and somehow magically make back 15 years of gains.

[Dylan16807]

> That’s not a good example because the expected value of your returns is less than the market returns. Only rubes would invest in such a scheme.

So take the same odds except you pick stocks in a way that you believe you'll beat the market. Nobody knows the actual odds upfront. And there's plenty of money going to funds that don't pan out.

> You’re not going to make a bet at year 18 and somehow magically make back 15 years of gains.

That depends on how much your portfolio stands out. If you're .1% worse than the market for 15 years and then you make a bet that gains you 2.5%, you just beat the market.

[halpmeh]

My point was that your example shouldn't have provable negative expected value. Feel free to use the S&P 499 example in the future.

And look, I agree that indexed investing is likely the best strategy for most people. However, some people do beat the market consistently over the long term. TFA states that plainly, although it tries to downplay it. Additionally, this specific "research" is released by S&P Dow Jones Indices. What is the S&P 500 and Dow Jones if not a hand-picked selection of stocks? So this article isn't really saying it's impossible to beat the market. The article is saying that it's impossible to beat S&P Dow Jones Indices at picking stocks, which means the article is just a marketing piece. I'll also add that the S&P 500 plays with a stacked deck. By the nature of its size, companies included in the index trade at a substantial premium to similar companies outside of the index.

[Dylan16807]

> My point was that your example shouldn't have provable negative expected value. Feel free to use the S&P 499 example in the future.

It's just an example that doesn't even use stocks. I think it's obvious enough that nobody can prove expected value for actual stocks.

> However, some people do beat the market consistently over the long term. TFA states that plainly, although it tries to downplay it.

By what definition of "consistently"? I see no such statement in the article.

Being up after X years is not consistently beating the market. That's beating the market once. You have to look at multiple time periods to talk about consistency.

> Additionally, this specific "research" is released by S&P Dow Jones Indices. What is the S&P 500 and Dow Jones if not a hand-picked selection of stocks? So this article isn't really saying it's impossible to beat the market. The article is saying that it's impossible to beat S&P Dow Jones Indices at picking stocks, which means the article is just a marketing piece.

It's not "just" a marketing piece if it's right. And they're using those baselines because it's the closest thing to "the market" we have available.

And it's obviously not impossible to beat the market. But if nobody can do it reliably, then nobody should get your money to try.