The message here isn’t: “You’re not as smart as those other day traders, so don’t try”. The message IS: “We expect randomness to occur in both the lottery and stock picking, so while we know some winners will exist, that isn’t evidence that it’s a skill based game that can be replicated.”

If I was a douchebag and wanted to make more money I wouldn’t be saying this. It would be pretty easy to run an account like this and highlight big stock picking wins, fail to mention the losses, and never share a careful audit of how I perform overall relative to the market. It would look good. I could sell access to my future picks or my trading system. I’d highlight my lavish lifestyle, make splashy posts about huge gains I’ve had in the market, invite people to join my inner circle of day trading experts. Does that sound familiar?

And ironically, none of the above actually requires beating the market, just crafting a message that appears like winning. Yet there ARE some winners. I’m sure I’ve met and talked to some of them. That’s because there’s randomness in the market. If everyone is picking stocks at random we know some of those stock pickers will outperform. But was it skill or luck? Those who win are quick to credit their system, skill, knowledge, or research. Of course they would. They put in the work, it paid off in profit.

But if you zoom back you see it’s just a normal random distribution. Those winners are due to luck, not skill. We’ve seen from studies over and over that even professionals can’t outperform the market over time. And when you look at just those traders who outperformed recently, they’re no more likely to outperform going forward.

So don’t get sucked into the myth that you can “do your research” or “follow a system”. Your best bet to maximizing wealth is to buy and hold index funds, minimize your fees, and minimize churn on your portfolio.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy