Many small investors think that they can beat the market.
When they see that the average stock market return is 8% year on year, they think that they can do better.
They try to beat the market by trading frequently.
In the end, they lose out and achieve sub-par return. That is because the transaction cost eats into their profits.
If you are new to the stock market, it is good enough to achieve the same return as the index.
You should pay attention to the sentiment in the stock market. When the fools come in and start to make a lot of money, and brag about it, it is time for you to get out.
Once you get out, you stay out of the market. The stock market will crash because of the flood of fools who keep the prices high.
The smart investors stay out, and remain out of market until the crash brings the prices down to a decent level.
They buy when the prices are low. That is why they can beat the market.
Youi need a crisis that brings the share price down as much as 50%. That is the secret to beat the market.
Never try to beat the market when the market is still bullish.