Value Investing How solid is the case that beating the market is an attainable goal for individual investors?

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How solid is the case that beating the market is an attainable goal for individual investors? Posted: 26 Feb 2020 09:32 PM PST Let me refine my newbie question a bit. I'm asking specifically about a talented but not professional small individual investor aiming to beat the market over a 10+ year time horizon using Buffett-style fundamental analysis and a buy and hold approach. Some of the arguments I've heard for why a person should be able to beat the market with this approach even though active fund managers largely can't: Very low AUM means access to a much larger opportunity set, some of which faces far less competition from smart money. Very low AUM means you can get into and out of positions without affecting the market price. Individuals are free of various regulatory constraints that fund managers face. Two specific characteristics of security analysis make it more conducive to being done on an individual basis: It may take years for the market to recognize the value in a stock that it has been underpricing. And value investing necessarily requires a concentrated portfolio. Put those two together and you have a recipe for shake out in most fund management situations. This severely limits the amount of competition faced by the solo investor on many of the best opportunities. Maybe the last one is the key. Buy and hold differs from trading in that respect. With trading, professionals with superior skill, resources, information, etc face no such impediment, because trading is supposed to show its true colors on a relatively short time frame. In contrast to the Buffett approach, I don't see a case for why industry wouldn't devour pretty much every solo trader and diy quant. And Buffett has said that while know-nothing investors should index, know-something investors can do better... submitted by /u/coininthebarbarian [link] [comments]

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