The key is that for every Apple, there are a ton of companies we don’t even remember the names of that went out of business or otherwise did not beat the SP500.

Put another way - if you can reliably pick the next Apple before anyone else, you should go work in finance and make tons of money.

> Put another way - if you can reliably pick the next Apple before anyone else

Problem is that it might take years to verify that.

> The key is that

That doesn't change the fact that there are plenty (in absolute numbers) of individual investors who consistently beat the market. Whether that's because of luck or something else is rather hard to tell.

> That doesn't change the fact that there are plenty (in absolute numbers) of individual investors who consistently beat the market. Whether that's because of luck or something else is rather hard to tell.

It's actually not very hard to tell; if it was because of something other than luck, you'd expect that beating the market in the past would have some predictive value of their ability to beat the market in the future.

Individual traders beat the market all the time, it’s not impossible. But you can’t expect to do it reliably, because in practice it’s essentially gambling, unless you’re Warren Buffett, or those firms that utilize sophisticated quantitative or algorithmic trading.

So for all intents and purposes, the takeaway for regular investors should be that they cannot expect to beat the market (but they can gamble on it if they like).

Lots of people "play the market" as a mostly total game of chance. They might just as well join a giant pool that tries to guess the ratio of alphabetic characters within each morning's top headline of their favorite newspaper.

Warren Buffet buys the newspaper and has significant control of the editor. That's not the same game at all.

There's a lot of talk here about active fund management. Active ownership is playing on a completely different level.

You do know there are thousands of stocks right. how many people dump their entire savings into one stock. 20 years ago you wouldn't have known apple was going on to do so well. If people did know it would have been bid up in price at the time

Some will, but there is no reliable way to tell which one in advance.

And a lot of the Apple run-up happened relatively late in the game. Don't get me wrong. Apple--and what I was able to do with the money--was good to me. But so was a late 2010s Microsoft purchase and I don't think a lot of people are highlighting Microsoft as a stock they missed out on during the last 10 years.

It is on average, not from cherry picked examples.

That claim is not phrased like that, so why would we interpret that way?

> average

So what? It's like saying that since an average person can't run a marathon it wouldn't make sense for any individual to even try it. How does that make sense?

> cherry picked

If we agree that 50% of all investors can't beat the market, what proportion can? 1%, 10%, 30%? Because there is a massive difference.

How do we even define that group? Is it any random person buying random stocks with pocket change? Is it above a certain portfolio size? etc.

"Average" is a bit misleading word when it comes to the market.

If you're a top investing expert, you do things carefully in the right way, and you don't make mistakes, you can expect average performance. Because the market primarily consists of experts like you.

Of course, investing is a random process, and you often beat the market by being lucky. But luck doesn't last indefinitely.

There are basically two ways to beat the market consistently. One is trading based on information not available to the rest of the market. This is sometimes banned, because it makes the market less fair and less efficient. It can also be a crime. The other is finding a market that's small enough or obscure enough that it's not interesting to the professionals.

But there is no investing stat that allows you to beat the market. Life is not an RPG.

You’re missing the word ”expect” in the original claim.

You can beat the house at blackjack, but you can’t reliably expect to do it.

Investment is hardly a zero sum game. If it were nobody would make anything buy investing passively either. So how is that a reasonable analogy?

> you can’t reliably expect to do it.

Sure, I can't. But assuming that it's not entirely random chance some proportion of people certainly can.

> Investment is hardly a zero sum game. If it were nobody would make anything buy investing passively either. So how is that a reasonable analogy?

I think you’re reading too much into the analogy, which is maybe my fault for using an analogy. The point was just that it’s not that you can’t win, just that you very likely don’t have an edge - not because it’s mathematically impossible like in blackjack with a shoe that’s continuously shuffled, but because it’s so difficult.

> Sure, I can't. But assuming that it's not entirely random chance some proportion of people certainly can.

Yes, but the bar is very high.

And if you put your house on 26-black and it came up you'd be doing great too.

Take 100 people randomly throwing darts at the companies on the SPY, and a fair few will do better than the SPY overall. Doesn't mean they can expect to beat the market

Yeah. And 20 years ago, there was no iPhone and an only somewhat interesting MP3 player compared to other brands. I did OK with Apple but not suggesting it was much other than luck.