You don’t need to beat the market

Much of the mainstream media commentary around investing carries with it the assumption that everyone’s goal should be to try to “beat” the market. But what does that mean? And does it make any sense at all?

Essentially, the idea that ordinary investors can consistently do better than the market, after allowing for risks and fees, is a fanciful one. The truth is even the pros struggle to outperform the market year-in and year-out.

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Giving in to fear can be very expensive

Fear is a hugely powerful emotion. It makes us do irrational things, and the sad fact is that, in the context of investing, there’s no shortage of people who want to take advantage.

The Californian financial adviser and blogger Robert Seawright wrote an excellent article on this subject in 2018. “When the markets are roiling,” he wrote, “fear is pitched all day, every day, and human nature buys it. And pays a premium. A very big premium.”

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PFP Financial Blog – Attaching a monetary value to financial advice misses the point

These days we’re obsessed by value — not just businesses, but individuals too. We all want to make the most of the limited financial resources at our disposal, and quite right too.

There is however a danger in constantly looking at value in purely monetary terms. In other words, how much will it save me, in monetary terms, to buy this particular product or service as opposed to that one. Financial advice is a classic example of where the focus on monetary value isn’t particularly helpful.

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