Finance needs more 'willing losers' | General financial discussion | Discussion forum

Interesting blog article A Wealth of Common Sense: Willing Losers mentioned by Globe & Mail contributor Scott Barlow in Finance needs more 'willing losers,’…

It puts forward a theory from Charley Ellis about why it used to be easier to outperform the market. Back then,

Ninety percent of trading was done by individuals. And who were they? They were nice people…who bought or sold once every year or two, usually in odd lots because that’s how much money they had. And about half the time it was AT&T. And they bought because they’d been given a raise or a bonus or an inheritance and they sold because they were sending kids off to college buying a home or some other sensible purpose. And it had nothing to do with what’s going on inside the market.

And they didn’t know very much but that didn’t matter. They were buying a few blue-chip stocks that they’d read about in magazines and stuff like that.

Were they hard to beat?

No way! They were easy to beat.

And the secret to successful active investing is to have what’s called willing losers.