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REDDIT

This is the number 1 reason why you will probably not beat the stock market

A
Apr 1, 2025 · 15:23

Something I have realized over the years as an investor is that pretty much all popular wisdom about investing is a partial truth or completely wrong. Many well-meaning people offer here advice that is so common place as to be accepted as fundamental truths about investing. This is no other thing than crowd-behavior.

What you need to beat the market is critical thinking. It is not stoicism, or any other attribute people talk about. Investing is not a matter of "controlling your emotions". If that was the case, taking an ice bath should supercharge your investing skills. And critical thinking is in such short supply that the market will keep having inefficiencies built in and everyone will keep saying that it is pretty much perfect. If you know what you are invested in and why you are doing what you are doing, your approach to the markets should be irrespective of what other people are doing.

But even while I am saying this and you might agree, you will probably continue following the crowd, inadvertently, because you know no better and beliefs are so ingrained that you will not question them. Some examples of half-truths or completely false investment advice: "buy and hold is the best approach to investing", "you should only invest in US equities", "you should always diversify", "you should never use leverage", "value investing no longer works", "you should never invest in commodities", "buy the dip", "you should not invest in alternatives", "you should only invest in stocks" or "you should always be invested in stocks and bonds", "all indicators are useless", "Valuation metrics and ratios are useless", "you cannot beat the market because most hedge funds fail to beat the market", "stocks return 10% per year". And there are many more.

Distrust 90% of what you read in this subreddit and other finance subreddits. Read books. But if you know you cannot think critically, be a completely passive investor, there is no shame in it. But do not attempt to be a semi-active investor or give investment advice.