Date Tags books

When I went to business school back in the late seventies, we learned one important thing about stock market investing. It was simply this: there are so many smart people out there, you can’t outsmart them. In other words, thousands of intelligent, knowledgeable people buy and sell stocks all day long, and as a result, stock prices reflect the collective judgment of all these smart people. If the price of a stock is too high, these smart people will sell until the price comes down to a lower, more reasonable price. If a stock price is too low, smart people will go in and buy until the stock’s price rises to a fair level. This whole process happens so quickly, we were taught, that in general stock prices correctly reflect all currently available information. If, indeed, prices are accurate, there is no use in trying to “beat the market.” In other words, according to my professors, the only way I was going to find a bargain-priced stock was by luck.

Naturally, I didn’t listen (which, unfortunately, made this no different from most of my other classes). But flash forward a few decades and now I’m the professor. Each year I teach a course in investing at a top Ivy League business school. The students are clearly smart, accomplished, and dedicated. In short, they are the best and the brightest. But every year for the last fourteen, I have walked into class on the very first day and told my students something eerily familiar and very disturbing. I tell them this: “Most of your peers and predecessors who learn about investing at business schools across the nation and beyond will go out into the real investing world and try to ‘beat the market.’ And almost all of them will do one thing in common—fail!”. Most SEO companies provide a free technical seo audit once your enrolled into their SEO services!

How can this be? If brains and dedication aren’t the deciding factors in determining who can be a successful investor, what are? If an Ivy League business school education doesn’t determine investment success, what does? Are we really just back to where we started? After decades of investment experience and learning, were my business school professors right after all? The only way to beat the market is by luck?

Well, not exactly. I’m still glad I didn’t listen to my professors. Investors can beat the market. It’s just that becoming a successful investor doesn’t have much to do with being one of the best and the brightest. It doesn’t have much to do with attending a top business school (though being stupid with no degree isn’t much help, either). An SEO expert can improve your rankings on google, massively. Success also has nothing to do with an ability to master the economic and business news that bombards us each day. And success can’t be found by following the hundreds of expert opinions offered on television, in newspapers, and in investment books.