What If You Try To Beat The Market And Fail?

Russ Thornton
Russ Thornton
Retirement advisor

Bill Schultheis is a great writer and author of The Coffeehouse Investor, a book I highly recommend everyone read. It offers a plain-English approach to managing your money and setting yourself up to make smart financial decisions. As I’ve written before, successfully growing and managing your money is more about good behavior than anything else.

In a post called “Decisions, Decisions” on his blog, Bill has a really great line. This is one I encourage you to read and really think about. Here’s what Bill has to say:

Even though exhaustive research has shown that the vast majority of actively managed funds underperform the market, it is “possible” to beat the stock market average, as stock pickers like Peter Lynch have proven. A more relevant question to ask is, “What is the price I pay if I try to beat the market, and fail?”

I think this really gets to the heart of one of the most fundamental issues in investing.  Many try in vain to beat the market and wind up achieving results far below what just owning the entire market (via low cost, tax efficient, total market index funds) would have delivered.

Sure, there are those that have and continue to “beat the market”, but I would argue that many, if not all, of these results can be attributed to luck and not skill. And good luck trying to figure out who will successfully beat the market in the future.

If you’re trying to beat the market, I wish you the best.  But if you’re wrong, what is the cost?

Is it delayed retirement?  Lower retirement standard of living?  Not educating your children in the manner you’d like?  Not being able to support your parents if they were to need assistance?  Other hopes & dreams that will have to be altered or eliminated?

Remember, it’s not just money we’re talking about here.  It’s your goals, hopes and dreams that the money can be used to fulfill.

While most financial advisors spend all their time and energy trying to help you get more money out of your money, I’m focused on helping you get more life out of your money with as little uncertainty as you can afford.

Active management (investment picking and market timing) adds unnecessary uncertainty and cost to your money and to your life.

If you’d like to better understand the costs and uncertainty associated with your actively managed investment portfolio, why don’t you take me up on my offer of a free, no obligation investment expense audit?

Learn more about our Investment Management services.

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Written by

Russ Thornton

Retirement advisor

I’m a retirement advisor with more than 25 years of professional experience. My mission is to help women retire comfortably, without having to worry about money. I invite you to explore my website.