4 Reasons Why Most People Can’t Beat The Stock Market

automatonsIt’s a fact:  Most people get beaten by the stock market.

And the ones that beat the odds?  Many of them only win because of luck.

Luck that runs out at just the wrong time.

There are many reasons why, and the the truth is this:  If you can’t overcome most of them,  you won’t stand a chance of beating the stock market over the long run.

Reason #1: You’re in a losing game

Simple logic makes it immediately clear why the majority of people can’t beat the stock market, with or without luck.

The average return of all investors is equal to the stock market’s return minus taxe, trading costs, and management fees. 

To beat the market, you’ve got to overcome all three.

Reason #2:  You ride the roller coaster ride from hell, then jump off

To have any decent chance of beating the market, you’ve got to be willing to buy when there is blood running down the streets, trickling into the gutters.  That’s not the easiest thing to do after you’ve seen your life savings cut in half, or are afraid for your job.  And if you already lost your job?


When things look bleak, it seems smart to sell and hold onto whatever you have left.  And so people sell at just the worst time, when they should be buying even more, or shifting from what they’ve got into even better values unearthed by the shaking out of the market.

It’s like you were stuck on an out of control roller coaster, and had no idea when or where it would stop.  Instead of waiting for it to plunge into the ground, you’ll probably jump out near the bottom.  Sometimes right before it rockets right back up.

If you can’t control your emotions while investing, you won’t wait or strap yourself in to the best bargain rides out there – you’ll jump, and most likely at the wrong time.

Reason #3:  You believe in methods that don’t work

There are scores of systems and methods that supposedly beat the market.  Many of them are based on technical analysis or tips on story stocks that are supposedly about to rocket off into space.

Studies clearly show technical analysis doesn’t work, at least for most people.  And the odds are sometimes better for Lucky at the horsetrack than from any given stock tip.

Instead of trying to win a losing game, why not search out those areas in the markets where the odds are stacked in your favor

Value investing has worked for everyone who adhere to its methods over the long run.  It’s worked for generations, and thanks to human-kind’s tendency to do stupid things based on their emotions, will likely continue to work for generations more (or at least until supercomputers rule the world).

Reason #4: You trust sharks with your money

Many people still place tremendous faith in mutual fund managers, investment advisors, and stock analysts. 

But most of them can’t help you beat the market.

As the chairman of the Vanguard group, John , Bogle, puts it, over every 10 year period since the sixties, 90% of mutual fund managers have underperformed the market averages.

Investment advisors & brokers aren’t much better – many times they are looking out for #1, pushing you into inappropriate funds or stocks just to get their own cut.

And stock analysts?  Well, most of them rate stocks highly when they’re expensive and lowly when they’re cheap. 

No matter what, don’t give sharks your money – you might lose an arm and a leg trying to get all of it back.

Over to you

What do you think are some other reasons investors lose to the markets?  Please share your thoughts below.

And don’t forget to  subscribe to Happily Ever After Investing  for more tips to help you beat the market safely.

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