Fsdfsdfsdfsd S asked:


I JUST asked this same question today. I think one of the people who answered told me that a wealthy investor will try to beat the stock market by three to five percent, so thats, over the course of the last 30 years, 10 to 12 percent. Is it possible to get more if I study stocks for a living, and am good at it????? What is the deviation from the figure i’ve just given for proffessional investors???

IRWIN

6 Responses to “How much can one beat the stock market by if they work hard?”

1. $so fresh so clean$ on February 26th, 2009 5:30 pm

   Do you mean over a period of time or in a year? Most people don’t beat the market.

2. tjfinvestor on March 1st, 2009 3:13 pm

   Hi, working hard has nothing to do with beating the stock market. There are not very many money managers that can claim they beat the market over long periods of time. So if you think you can beat the market everyday then you are probably going to be disappointed. You can beat the market over short periods of time by factors of 10 or more but, its not sustainable.

3. riffmonster on March 3rd, 2009 3:19 pm

   There are two ways people try to beat the market. a) Pick superior stocks, and b) Try to predict the ups and downs before they happen. The people who get paid to do this professionally are called Mutual Fund Managers. In any given year, more than 80 percent fail to beat the market indexes (i.e., S&P 500, the collection of the top 500 US companies, by revenues). If you take the 20 percent that did beat the index, a much smaller number are able to do it two or more years in a row. The house always wins in the end!

   Meanwhile active trading has transaction costs, is usually tax-inefficient.

   What you can do to improve your returns is allocate your money to diversified portfolio of index funds or index ETFs. The idea is you by a certain amount of large cap stocks, a certain amount of small cap stocks, some real estate investment trusts, some international, etc. Over time this method outperforms any single index while lessening volatility (risk).

   The bad news is that the last 6 months has been such an extroardinary bad market that virtually all asset classes lost significant value. So even this approach has its down years.

4. Tom J on March 4th, 2009 2:28 pm

   The ONLY way to beat the market is to take more risk than the market takes. Systems don’t work. Warren Buffet has made 28% or so for over 40 years, so you can beat 10-12%, but you will have to take more risk than you would like.

5. Sean K on March 6th, 2009 11:13 pm

   The market is designed to steal other people’s money. Its estimated that two thirds of all transactions are now done by computer algorithms. You can’t beat computers making hundreds of transactions a minute. That guy with the robot is a scam. Personally I don’t trust other people with my money let alone a robot.

   You might luck out and beat the market but the next day it will take it all back.

6. Matt on March 9th, 2009 3:01 pm

   I receive this newsletter that’s great for day traders or people who want to become day traders. It has some pretty helpful tips as well as actual trading advice. He sends you stock picks in the morning and they often give you a pretty great return.

   Here’s the link….