Why do some retail investors/traders think they could beat the market (in the long run)?

[ChadFucksYourOneitis]

Seeing a friend who is into finance for a long time (almost 7 years) couldn't make a serious gain on his investment. He read tons and tons of investment books and utilized both fundamental and technical analysis. His portfolio would have been doubled by now if he invested in an index fund.

Another guy is a guy from my major , he's an aspiring day trader who loves following fancy chart tricks from various sources.

I admire their determination and hard works , these two guys are fairly smart but do they seriously think they can beat the collective wisdom of the market consisting of business inner circles , stock whales and an investment firm with an army of MIT math doctorates who have their pulse on the market , work around the clock and do high frequency trading with their supercomputers?

Do they know what they're up against?

 

[ChadFucksYourOneitis]

Just put your extra bucks in an index fund consistently , turn off CNBC , unsubscribe from the talking heads on YT and let the heebs work for you.
30 years later you'll wake up as a millionaire or even multi-millionaire depends on your monthly contribution.

 

[Chinacurry]

Nah those quants and hedge funds need to show relay high returns really quickly.

I think retail investors, at least my strategy, is just look for intrinsic values and basics of finance and how corporations work, and buy stuff that's undervalued, and look for reasonable return over the medium term.

 

[Huge غرور]

Ego

 

[noodlelover]

I think there are a few factors. Ego is one.

One is that probability distributions of future outcomes are not contiguous. So for example, you could learn chart patterns and be able to predict the market 60% of the time, and then use that edge for years to make money, growing in confidence over time, and growing in your knowledge of chart patterns.

And then you get wiped out by a black swan ultra low probability event, or sequence of events if you are trying to spread out your trades, and loose all of the money you made over the years and then some, as well as all the time you invested.

The market is a dynamic system, and chart patterns and strategies that worked in the past do not continue to work in the future, as most money changes hands from dumb holders to more intelligent holders, to even more intelligent manipulators.

I am an investor, but my strategy is very simple. I find something that I know is undervalued, and then hold onto it for years and years until it grows and the market recognizes it's value. Same as warren buffet, he also doesn't try to time the market. If I can't find those rare gems then I'll park my money in index funds, using a gold mining index fund as a hedge against stock market volatility.

 

[Harold O'brien]

the market is retarded btw, that's why it's so hard to beat

 

[Sal]

imagine trading stocks lmaoooooo

 

[Alexanderr]

Seeing a friend who is into finance for a long time (almost 7 years) couldn't make a serious gain on his investment. He read tons and tons of investment books and utilized both fundamental and technical analysis. His portfolio would have been doubled by now if he invested in an index fund.

Another guy is a guy from my major , he's an aspiring day trader who loves following fancy chart tricks from various sources.

I admire their determination and hard works , these two guys are fairly smart but do they seriously think they can beat the collective wisdom of the market consisting of business inner circles , stock whales and an investment firm with an army of MIT math doctorates who have their pulse on the market , work around the clock and do high frequency trading with their supercomputers?

Do they know what they're up against?

It’s possible because it’s been done before, granted, it’s very, very unlikely but the statistical odds don’t deter most from trying anyway. I suppose it’s just human nature, some people don’t like passively investing because it’s boring.