Sunday, December 22, 2013

Can We Beat the Market?

As investors we often  hear talk about "beating the market." It has almost become a holy grail for many, but can we really beat the market?

Do I as an investor even want to beat the market?

It would be nice to earn consecutively high amounts of interest on my money, don't get me wrong, but beating the market is not one of my goals. I aim to earn more on my investments than the rate of inflation. So I am generally happy most of the time.

Also to be contrarian, I also love stock prices to fall. A falling stock price in a falling market can mean a bargain price. A falling stock price in a stable or rising market can mean you just need to get away from that stock pretty darn quickly.

Beating the market means I win,. For me to win someone has to lose. That someone has to be you.

We are all the market. You make as important a contribution to my beating the market as everyone else. In the long run I cannot beat all of you often enough to claim that I consistently beat the market. I do however, come in the upper return levels often enough so as to make me happy. Returns this year for me are above inflation andmy cash balance is nicely placed for the coming year.

Can we Beat the Market, yes, I have done it a couple of times in the past thirty years. My method then was mainly to stick all my money in one hot stock. Scarey, especially when the hot stock turns colder than an iceberg in deep space, and falls to nothing meaning that I beat the market at losing too.

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