The fundamental problem with picking stocks is it's not a 50/50 chance as most investors think.
80% of all stocks generated 0% return and the remaining 20% of stocks accounted for all the gains.
If you randomly pick a stock, you only have a 20% chance of turning a profit. pic.twitter.com/Mz7pFbeMQp
— Market Sentiment (@mkt_sentiment) June 3, 2023
If you still think you can pick the winners, consider this:
The last two decades were dominated by tech.
But, take a look at the top ten performers in S&P 500 from 2000 to 2020.
Only two of them were from tech. pic.twitter.com/XG4IPLPicB
— Market Sentiment (@mkt_sentiment) June 3, 2023
Though the business had solid fundamentals and great growth, the market conditions and sentiment caused the stock to fluctuate.
Imagine holding the business when it’s down 20% while the market is up 10%.
You'll start to question your investment. pic.twitter.com/vgKK4hJ7qg
— Market Sentiment (@mkt_sentiment) June 3, 2023
And for manager skill to be considered statistically significant, it would take a fund manager 36 years of continuous 2% alpha over the benchmark.
(h/t) @benjaminwfelix pic.twitter.com/FnfH25JcSK
— Market Sentiment (@mkt_sentiment) June 3, 2023