Fund picks and pans stocks

$so fresh so clean$ says:

Do you mean over a period of time or in a year? Most people don’t beat the market.

riffmonster says:

There are two ways people try to beat the market. a) Pick superior stocks, and b) Try to predict the ups and downs before they happen. The people who get paid to do this professionally are called Mutual Fund Managers. In any given year, more than 80 percent fail to beat the market indexes (i.e., S&P 500, the collection of the top 500 US companies, by revenues). If you take the 20 percent that did beat the index, a much smaller number are able to do it two or more years in a row. The house always wins in the end!

Meanwhile active trading has transaction costs, is usually tax-inefficient.

What you can do to improve your returns is allocate your money to diversified portfolio of index funds or index ETFs. The idea is you by a certain amount of large cap stocks, a certain amount of small cap stocks, some real estate investment trusts, some international, etc. Over time this method outperforms any single index while lessening volatility (risk).

The bad news is that the last 6 months has been such an extroardinary bad market that virtually all asset classes lost significant value. So even this approach has its down years.

Sean K says:

The market is designed to steal other people’s money. Its estimated that two thirds of all transactions are now done by computer algorithms. You can’t beat computers making hundreds of transactions a minute. That guy with the robot is a scam. Personally I don’t trust other people with my money let alone a robot.

You might luck out and beat the market but the next day it will take it all back.