Why is it so hard to beat the market?

stocktraderXXXX

People trade at different performance levels.

You put in a mnimum of 600 hours a year at this point.

A few hours per business day.

Were you getting much out of your efforts, you would be much further along.

You are heavy into FA and that doesn't make much money.

you could do a shorter effort on FA and focus on wo lists:

1. Stocks projecting 250% annual growth rate for the next three years.

2. The next list below that and limit it to 100 stocks. You will see their growth for 3 years is terrific as well.

None of your stocks for two years have made the list. Th means that you work in research has not paid off in any noticable way.

Were you to spend an equal amount of time on other efforts, you would have a very different result.

As suggested, there are many stocks that out perform the indexes and their Beta value will tell you by how much. You trading is running under 2 beta.

Most aggressive investors go for the nominal 60% a year. They use a limited POA and read monthly statements as their only activity.

None of my comments are affected by either bull or bear conditions.

If you want to cut your time back to 30 or 40 minutes a day and get focussed on the better stuff, you results for the year can be done in the first quarter. On an annualized basis, your results will be 10 times what they are now.

The three basic changes you need to do are:

1. Add TA to your quiver.

2. Sort using FA for quality instead of what you do and do it automatically (once a week is good enough).

3. Perform a daily routine that lets you rotate capital through to opportunities of 2.

Plan on starting the first of the year.
 
If I told you that when rolling a pair of dice the median value is 6, and that I could beat that value consistently (rolling higher than 6 every roll), would you believe me?

What if I rolled the dice only 4 times and got, 7,8, 9, and 12, would you conclude that I can truly beat the dice?

Beating the market 4 times with a low trade count means absoutely nothing, stop fooling yourself. I can take 40 random trades with a year hold time and find a million random sets that make huge profits. How do you know you are not one of the random sets?

To anyone who says beating the market is easy, go tell that to the 95+% of money managers who do this as a full time job and fail to do so. Yeah, must be a piece of cake when throwing darts beats most fund managers.

I beat the market this year, but with about 5000 trades, with a 64% win rate, and a profit factor for 2.4. Now that is statistically very significant. I can prove beyond a doubt that it wasnt sheer luck, you cannot with such a small sample set.
 
You may be right, but I don't read news just to keep up with my portfolio. It's actually a hobby of mine. So technically, I'm making money while enjoying what I like to do already.

I don't think you can do a cost/benefit analysis with the total time spent to overall portfolio performance. A lot of money managers (mutual funds, hedge funds etc.) do this full time and yet they don't always beat the market. I'm sure their total time spent to ROI will be much lower than mine.
 
FWIW, we shoot for 36% annual return on our "Family portfolio"...this does take a lot of full time portfolio management. It takes several of us to achieve this number, but for the last few years we have taken a lot of the risk out by staying market neutral (as in Pairs trading).

This requires collecting a decent amount of interest on short stock (which, unfortunately, retail traders don't receive)....and a lot of research.

We never try to "beat" the market, just go with it whichever way it goes. Understand the bias of the market, allow for it, and develop enough frequency of trades to offset any extended trends going the wrong way.

Don
 
TraderDragon:

I'm not trying to toot my ow horn. All I'm trying to figure out is - why is it (other than the bull market argument) that I can spend a small amout of time and do relatively well, yet pro money managers can't do well when that's their job.

If I consider myself lucky, then how come none of the managers get lucky? If a manager has 15 years of experience, then how come many of them can't beat the market more often?

Personally, I think a lot of money managers focus on short-term benefits and don't wait as long as a year to find out the long-tern benefits. What say?

For instance, I said Q4 of last year didn't added much of the value to my portfolio. Had I exited and bought new positions, maybe I could've gotten an even higher return.

And also, I don't consider rolling dice and stock investments as a similar comparison. Although both are uncertain, stocks are somewhat calculated than rolling dice, if not more so.
 
Try managing $100+ mil for 5-10 years.

You'll quit posting bs like this in no time!

Quote from stocktrader3429:

TraderDragon:

I'm not trying to toot my ow horn. All I'm trying to figure out is - why is it (other than the bull market argument) that I can spend a small amout of time and do relatively well, yet pro money managers can't do well when that's their job.

If I consider myself lucky, then how come none of the managers get lucky? If a manager has 15 years of experience, then how come many of them can't beat the market more often?

Personally, I think a lot of money managers focus on short-term benefits and don't wait as long as a year to find out the long-tern benefits. What say?

For instance, I said Q4 of last year didn't added much of the value to my portfolio. Had I exited and bought new positions, maybe I could've gotten an even higher return.

And also, I don't consider rolling dice and stock investments as a similar comparison. Although both are uncertain, stocks are somewhat calculated than rolling dice, if not more so.
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You can spend a small amount of time and do well because there probably is no correlation between the time you spent and your results. Youre still not getting it.

This is equivalent to saying:
How come I can spend a little bit of time rubbing the dice against my head, and "Feeling" what they will roll in the future, and actually roll higher than 6 on the next 4 rolls, when other people cant????

Because its simple dumb luck. Someone has to end up on that side of the bell curve and it just happen to be you.

How come none of the managers get lucky? Huh? Some of them do get lucky. 100% of managers do not fail to beat the market. The reason at least 50% are not lucky is because of the transaction costs involved in trading.

Can you show me statistical proof that your performance is based on skill and not luck? If you cant, then you can make no claims that you are doing better than the average money manager.

I can randomly choose 40 trades and get great results. I cannot do the same with 5000 random trades, and that is why I know *my* results are not based on sheer luck. I explicitly test for "luck" in my trades.

I could care less about horn tooting. If someone is making a killing and tooting their horn, im not gonna crap on their parade. Im posting this as a warning. Many a new trader rolls the dice, gets lucky, convinces himself he knows what he is doing, and blows up later down the line. You better know for a fact your returns are not sheer luck based on a good size sample set.





Quote from stocktrader3429:

TraderDragon:

I'm not trying to toot my ow horn. All I'm trying to figure out is - why is it (other than the bull market argument) that I can spend a small amout of time and do relatively well, yet pro money managers can't do well when that's their job.

If I consider myself lucky, then how come none of the managers get lucky?
More...
 
you are spending 40 hours per stock, you say.

10 to 15stock a year is so many hours

I guessed 600/250 days a year is

a couple of hours a day.

for 40 minutes a night you can make 330% a year.
 
Quote from stocktrader3429:

My performance remain unchanged. The Q4 didn't add much value. The periods you mentioned didn't matter at all. I think the most value my portolio ever dropped was 3.5 percent after going up 17 percent.
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Well, either you know the amount your portfolio changed in % terms, or you don't. Saying you "think" isn't enough - what are the actual numbers? Just to be clear, I'm talking about the highest daily close to the lowest daily close during those 2 corrective periods. If you don't have those numbers then perhaps you could tell us some of the stocks you held then, and we can get a rough idea by looking at the historical charts.

As an example, if you own XYZ corp and it is trading on Jan 1st at 100, and its lowest point in Q1 is 80, and it closes on March 31st at 120, then you had a 20% drawdown during Q1, even though you ended up 20% for the quarter.
 
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