If you have gotten into the markets in the past few years you probably did so on an initial implied promise that it was an easy way to make money. The promise may have come from excitement you saw expressed over a stock, a crypto coin, or an advertisement to open a Robinhood App. Maybe it was from a TV segment by a newscaster back in early 2021 talking about a “meme stock revolution.”
This year is a year in which the promises all went bust. But they were false promises to begin with when it comes to winning in the financial markets. When you study what individual investors actually do in the markets, and what you were led into thinking, it is a much different story. Back in 2000 a group of economists did a study using over 60,000 brokerage accounts to measure the real performance of individual investors. You can find that study here.
It turns out that 50% of people badly lag the stock market in their brokerage accounts and are essentially stock market losers. Only 10% of people truly beat the market. I talk a little in this video about what it takes to be in that category.
On one hand it may sound discouraging to realize that only 10% of people truly win at beating the markets, but the good news is that if you think of the market arena as a competition most people simply throw their money at it with ZERO game plan and little thought to what they are doing. The 50% of market losers are basically trading stocks like one buys a lottery ticket or plays the slots. In fact the situation is even worse than that – very few want to read a book even before they start to trade. So, to advance as a trader or investors that’s what you are competing against.
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