In the game of investing, it’s a battle between David and Goliath.
I can understand why you identify with David. It seems like there are massive resources aligned against you.
The securities industry has a well-entrenched business model premised on transferring wealth from you to it.
When you engage in a trade, most likely the entity on the other side of the trade is a high-frequency trader using supercomputers, an institution or a hedge fund.
The financial media – more often than not – is a source of misinformation, playing on fear and anxiety, and encouraging you to “take action,” which has the effect of enriching its advertisers.
Here’s the good news. Remember who won the “David vs. Goliath” battle? It was the guy with the slingshot.
The big guys don’t always win in investing.
A recent, exhaustive study of the performance of institutional asset managers (managing $18 trillion of annual assets) found they were able to generate “alpha” (returns above their benchmark index) only by taking risks outside their benchmarks.
Financial author, Larry Swedroe, reviewing this study, reached this conclusion: “institutional investors likely would have been better served by investing in lower-cost, passively managed mutual funds and ETFs that provided the same exposures to these common factors.”
Don’t make the mistake of the “big boys”, with their vast resources and high-priced consultants. Learn from their inability to “beat the market,” and ignore the advice of anyone who tells you they can reliably and consistently do so over the long term.
Use your slingshot. Load it with low management fee index funds or exchange-traded funds and fire away.
Goliath will fall.
I highly recommend this blog post by Larry Swedroe. He discusses the low odds of you and your advisor being able to “beat the market.”
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