You Suck at Investing – But We All Do

• Posted by Greg Harmon
• on December 26th, 2014

 

Let’s face it you suck at investing. Your advisor sucks at investing too.  You have all seen where monkeys picking stocks or throwing darts at a list can do better than many if not all advisors.

But Quartz is out with their annual analysis of just how bad you suck at this game.  If you had picked the best stock to buy every day you could have turned $1000 into $179 billion by mid December. That is a 17.9 billion percent return.

Did you even get a 1 billion percent return? How about 1 million percent? 1000%? 100%? If you did not hit a 100% return then you did not get even 4/10 millionths of what was out there. Translation: You suck at stock picking. People like Jack Bogle will use this type of data to tell you that you are wasting your time even trying and that you should just index your portfolio.

Coincidentally he runs a few dollars in an index fund. I find it more interesting when some manager makes a killing and convinces themselves that they are geniuses. No one in this game is a genius. 100% return sucks remember?

When you dig into more of these people, the elite suckers, the ones that can do it again and again, they all have one thing in common. It is not that they are on television and have great hair. Have you noticed that they usually are a bit modest about their results? The one thing they have in common is that they all have a process and are continually trying to improve it.

Yes there is still skill involved to be an elite sucker, but all of them also know that they are not as good as they can be and are trying to be better everyday. They work at it full time, all the time. And the best they can do is make less than 4/10 millionths of the best possible return out there.

Where else can you strive to achieve that kind of suckiness and be called a superstar? There are only 3 days left in the trading year and you are not likely to materially change your return against market perfection. But those 3 days are 3 more days to try to get better at what you do. To suck less. If you had a ‘good’ year, beating your benchmark then congratulations. But move on and keep trying to get better, because you still suck.

Happy New Year.

updated and annotated from a similar post in December 2013.

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