ASUPREMENEWYORKTHING

I’ll follow Slate.com’s Bad Advice column but YOU don’t really need to because basically, let me summarize this for you, other than to diversify, there is nothing that you can do. Actually, it recommends you invest in low cost index funds. It’s a cynical look (or realistic look) that says don’t bother trying to beat the market. If you diversify and you so happen to beat the market, good for you, you got lucky. Henry Blodget writes these great articles like ‘Stop Picking Stocks Immediately!’. Here’s a chunk:

First, in the seven decades since Graham wrote Security Analysis, the stock market has gone from being a playground for amateurs to a battlefield dominated by full-time professionals. One result is that pricing errors that once might have gone unnoticed for months in Graham’s day are now discovered and exploited instantly. Second, the amount of information available about the most obscure stock today dwarfs what was available about even the bellwethers a half-century ago, making it harder to dig up information that other investors don’t know. The moment the information is released, moreover, it is dissected, discussed, and debated by thousands of analysts, until most reasonable conclusions that can be drawn from it have been. Today’s technology also allows even part-time investors to screen tens of thousands of stocks in dozens of markets in the time it would have taken a Graham-era analyst to compute the “net current assets” of a single company.

Third, inside information that used to be quite valuable is now illegal to trade on. And, finally, the establishment of research centers such as the Center for Research in Security Prices (CSRP) has allowed analysts to study markets and investing in ways that the young Benjamin Graham could only have dreamed of—and, in so doing, to assemble a body of knowledge that makes much of the “investment wisdom” of the early 20th century seem as primitive and unscientific as bloodletting.

Imagine the last Lord of the Rings movie. You see all those monsters? There are billions of them, literally. I think the last battle was like half the movie, I’m not sure. Anyway, that’s what you’re up against. Even if you’re researching 24 hours a day you cannot beat them. No matter how much finance ninja you learn, you can’t beat that giant ogre and his minions. Don’t invest in the stock market unless you have inside information.