The $12 Investment That Could Change Your Financial Life

Why an Index Fund Beats Stock Picking for Most People

The research on individual investor stock-picking performance is consistent and humbling: the overwhelming majority of individual investors underperform a simple broad market index fund over any period longer than a few years. The reasons are well-documented




emotional decision-making, high trading frequency, and the statistical impossibility of systematically identifying mispriced securities in a market full of professional analysts. The counter-intuitive wisdom of index investing is to stop trying to beat the market and simply capture the market’s return, which historically exceeds inflation by a meaningful margin.