海角大神

Let鈥檚 say, hypothetically, that I figured out some ingenious way to predict the stock market so well that I would always significantly beat the annual returns of the S&P 500. Every year, year in and year out, I could get a 30% to 50% return in the stock market.

Assuming I鈥檓 not so altruistic as to just give away that knowledge, what would I do with it?

尝辞驳颈肠补濒濒测,听I鈥檇 use it to secure my family鈥檚 wealth.聽Then, if I could demonstrate the results to others,聽I might privately start a hedge fund or something to make more money from my newfound talent.聽I could make far more money doing these two things than pretty much anything else I might come up with.

One might argue that I could make a lot of money聽writing a book outlining my methods.聽Sure, that might work, and I鈥檇 probably sell a bunch of copies of that book. After the secret was out, though, everyone on Wall Street would begin using my 鈥渟ecret鈥� and I鈥檇 no longer have an edge of any kind.聽

In fact, as soon as I shared that knowledge with anyone I didn鈥檛 have absolute trust in, I would essentially no longer be able to get those great returns (at least, not after a very short period) because everyone else would be doing it, driving up the prices on those stocks and making it so I couldn鈥檛 actually earn money.聽By letting the cat out of the bag, I would be seriously damaging the financial future of my family.

What if I聽were聽being altruistic?聽Let鈥檚 say, for some reaon, I just want to let the world know this secret. Whichever investment banker sees the value and capitalizes on it first will hit the jackpot and few other people will earn much of anything on it. In essence, I鈥檇 give up my own family鈥檚 financial future to make some very wealthy person much, much richer without anything in return.

Would you tell聽anyone聽that secret if you had it? I鈥檇 be willing to bet you wouldn鈥檛. There鈥檇 be no聽good聽reason for you to do so. Given that,聽why would you ever put much value at all in someone telling you they have the secret to beating the market?

Let鈥檚 say the secret that someone is trying to sell to you actually is real. If that鈥檚 the case, they鈥檇 make far more money by keeping it to themselves and making a quiet mint. If their secret is real and they tell many people, then their investment advantage goes away and they鈥檙e back where they started.

It is extremely unlikely that the person offering to sell you financial tips actually is selling you anything that will give you any sort of advantage, let alone a lasting one.

What about the guy giving away tips for free? Again,聽if there was a real advantage to what the person was saying, you wouldn鈥檛 be able to get near it.聽The big investment banks would beat you to that advantage before you could even blink.

There is no specific investment advice that someone would give to an 鈥渁verage joe鈥� that will actually beat the stock market.聽For that pitch to be true, the person selling the tip would have to have the faultiest business model of all time, because they鈥檙e selling you an asset at a pittance that would be worth a gold mine. You would have to assume the person selling you the tip is extremely dumb, and if they鈥檙e that dumb, why would they have been able to break the stock market when the big banks could not?

If you want to learn about investing and figure out what you should be buying, visit your local library and start digging around in the personal finance and investing section. Read several books, compare what they鈥檙e saying, and figure out which elements are consistent and make sense. The advice in those books is public knowledge, so the big investors already know it. The goal of reading them is to know what they know and try to match what they can do.

From what I鈥檝e read, the best thing that I can do as an independent stock market investor is to mostly just buy broad-based stock index funds with the lowest annual costs so I can essentially ride the stock market. Aside from that, there is some sense in buying stocks in very stable companies that pay a nice dividend, like Coca Cola. The rest of your money should be in real estate or cash to protect yourself against a stock market failure.

There aren鈥檛 any secrets to investing success, in other words. If there is, it鈥檚 something that鈥檚 buried inside a hedge fund somewhere and, if the knowledge did get out, it would be completely dominated by someone who studies this information far more than you or I.

Play it safe. Don鈥檛 fall for people trying to sell you investment strategies or tips. Learn the basics of what you鈥檙e doing, understand why they work, and stick with them.

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