The stock market is a jungle. It is an ecosystem that is unpredictable, dangerous, fascinating, rewarding (to some), and full of life. To navigate it successfully, you need a guide. To write this guide, we are going to take a one year journey through the stock market jungle.
If you are interesting in beating the market—but understand that doing so has always been very difficult—then you have come to the right place. If you are interested in books of all types and learning in general, you’ve also come to the right place. You’ll find frequent discussions of the best books and ideas and how you can use them in your life.
If history is any guide, a very small percentage of us can outperform the market over the long term. The obstacles we face as investors are formidable: psychological biases that cause us to make foolish and inconsistent decisions, a playing field populated by very smart and sophisticated people, costs in the form of trading and taxes, and an unknown and unpredictable future.
Can we overcome these obstacles? Is it even worth trying?
To answer these questions, we will dive into data, stories, trends, and themes that have characterized stock markets since their inception. What factors should be used for selecting stocks? How often should you trade? How many positions should you own? How should you manage risk? Will strategies that worked in the past continue to work in the future? These are the kinds of questions that matter most.
A special note on books. I get almost all of my ideas from books, most of which are not about investing. I will often post reviews of great books and summarize their most useful ideas. These may cover history, psychology, business, math, science, philosophy, and human nature. If you aren’t already, sign up for my book list and you’ll get 3-4 of the best books I’ve read every month in an email.
At the end of this year, you will have the evidence necessary to answer this question: will you opt out of the market fight and simply accept the market rate of return by owning index funds, or will you try to be one of the few that can outperform?
On his desk, John Templeton had a plaque that read “trouble is opportunity!” For some time I have been driven—on both the personal and professional level—by this similar mantra from the mythologist Joseph Campbell: “the cave you fear to enter holds the treasure you seek.” The best opportunities are usual hidden behind layers of fear and trouble. Fear of active management, fear of certain global markets, fear of “risk,” and even fear of certain companies have blinded many investors from what turn out to be the best opportunities. We must remember that “the [market] battlefield is symbolic of the field of life, where every creature lives on the death of another.” We know that not everyone can win. The market is unpredictable. It is dangerous. But there are great opportunities disguised as trouble—so let’s find them.
I can’t wait to learn a ton in the coming year, and hope you can join me. To keep reading, head here.