My Investing Plan for 2023 | How I Will Beat the Market
"Unveiling my winning strategy for investing in 2023! 💼📈 Join me as I share my thought-out plan to outsmart the market and make informed investment decisions. From spotting trends to diversification secrets, this video takes you through the steps I'll be taking to achieve financial success in the ever-evolving landscape. Get ready for insights, tips, and a roadmap to potentially beat the odds and secure your financial future. Let's navigate the market with confidence and make 2023 a year of strategic gains! 💰🌟 #InvestingPlan2023
Excellent oppertunity to earn an incredible guaranteed return via contract. backed by the full confidence of my corporation. #jacobbillett #billettenterprises #beatthemarket #investing #oppertunity #investmentopportunity #makemoney #passiveincome https://www.instagram.com/p/B3nqKKQBG2-/?igshid=1c2l38htghtu6
“The revolution is here -slightly overdue”, says Jonathan Rawling, CEO of Beatthemarket.com @_BeatTheMarket #beatthemarket #insurance #UAE
Jonathan Rawling, CEO of internet start-up Beatthemarket.com and former CFO of Zurich Middle East is passionate about shaking up the sale of insurance in the UAE.
“The revolution is here -slightly overdue”, says Jonathan Rawling, CEO of Beatthemarket.com
“The revolution is here -slightly overdue”, says Jonathan Rawling, CEO of Beatthemarket.com @_BeatTheMarket #beatthemarket #insurance #UAE
Revolution. Disruption. Not words traditionally associated with the staid and rather boring world of insurance. But Jonathan Rawling, CEO of internet start-up Beatthemarket.com and former CFO of Zurich Middle East is passionate about shaking up the sale of insurance in the UAE.
Speaking about the revolution Jonathan Rawling said, “In the UK and other markets with high internet penetration,…
“The revolution is here -slightly overdue”, says Jonathan Rawling, CEO of Beatthemarket.com
Revolution. Disruption. Not words traditionally associated with the staid and rather boring world of insurance. But Jonathan Rawling, CEO of internet startup Beatthemarket.com and former CFO of Zurich Middle East is passionate about shaking up the sale of insurance in the UAE.
[quote float=”center”]In the UK and other markets with high internet penetration, consumers buy their insurance cover…
Share: A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
First and foremost, many individual investors are mistakenly convinced that they can beat the market. As a result, they speculate more than they should and trade too much. Two behavioral economists, Terrance Odean and Brad Barber, examined the individual accounts at a large discount broker over a substantial period of time. They found that the more individual investors traded, the worse they did. And male investors traded much more than women, with correspondingly poorer results.
This illusion of financial skill may well stem from another psychological finding, called hindsight bias. Such errors are sustained by having a selective memory of success. You remember your successful investments. And in hindsight, it is easy to convince yourself that you “knew Google was going to quintuple right after its initial public offering.” People are prone to attribute any good outcome to their own abilities. They tend to rationalize bad outcomes as resulting from unusual external events.
I recently wrote an article for the school economics magazine so its more of a editorial then an essay, hopefully it'll be published this term. Anyway, I'd just like to share it, please feel free give me any feedback on it.
Can you beat the market?
Well, can you? If I gave you a £1000 to invest with (not going to happen) , could you turn a profit? It seems to me that the common answer is yes, which to a certain extent I agree with, but how large? How much of a profit can be made? Theoretically, billions, but is that skilful investment or is it just pure luck? Most, importantly can you outperform the market?
Let’s start off by playing at little game. I’m going to let you pick an asset to invest in, asset A and asset B (very inventive I know). Asset A’s price has been rising steadily for the past 9 years, with an average growth of 8.6% each year. Asset B’s price has been dropping steadily for the past three months, in fact a 10% price drop. Which one would you pick to invest in? Most people would answer asset A, only logical, right? Well, asset A was property in New York just before the great depression, that year, house prices would drop as much as 30%. As for asset B? Asset B was the stock price for Verizon from July of last year to September, in the next month alone, Verizon’s stock prices rose by 10%. It may appear that I’ve just tricked you, by giving you misleading and limited data, and therefore leading to a ‘wrong’ choice. This is one of the reasons that people consistently fail to chose the right assets to invest in: misinformation, or the incorrect interpretation of data. Simply put, some people don’t know what to do with the information given to them, and that will in turn lead to random and ‘irrational’ investments of assets.
But, I’m not some people, you say. I’ll invest in what everybody else is investing in, with that many people buying it must be profitable...right? This has happened again and again in the past, people buying assets simply because others are buying it, just blindly following in the examples of others. Few stop and think to themselves, wait, is this group right? When a lot of people start buying something, the price of it will rise, greater demand, greater price (economics 101, you’re welcome). Some may see that rising price as a sign of profitability and before you know it, thousands more have invested, and the vicious cycle repeats. The problem is, this irrational demand has skewed the price of the asset away from its intrinsic value, its actual worth. At one point, people stop hopping on the bandwagon, and buying stops, some people realise that prices aren’t going to rise anymore and start selling. The problem is that this selling is rapid, many people don’t end up making a profit, and instead loses money. If it helps you, think of it as a party, some people start one, word gets out that it might be a good one, people start turning up, and for a while everyone’s happy. Then people stop coming, and soon the ones that are still sober (thinking clearly) realise the party’s pretty lame, and start leaving, people follow suit, and the party’s over. What’ve I’ve just explained is an economic phenomenon known as a bubble, granted, it doesn’t always happen. The basic mechanic behind it is what’s to be noted here: herd behaviour, so many people buy just because others do, not because of careful choices of assets, not smart.
The reasons stated above are rather simple, they’re just really examples of people, bluntly put, being clueless or reckless. There has to be a deeper answer than just ‘people being dumb’. Well, is where it will get a little bit more sophisticated, meet our friend: Efficient Market Hypothesis (EMH) developed by Eugene Fama. The basic principle that it preaches is that the price of any stock always trades at their fair value. How is that even possible? EMH states that stock prices reflect all information available, meaning that the price of a stock should never deviate from its intrinsic value, making it impossible for someone to outperform the market by selling stocks at a price that is higher than what it should be. Things like carefully selecting the right stock to buy and sell doesn’t matter, since you cannot sell it for more than its worth. The only way you can earn more under EMH is by taking higher risk investments, and nobody wants that.
At this point beating the market may seem like quite a grim prospect. From human mistakes to the idea of EMH, the odds seems pretty stacked against you, right? Let's look on the bright side though shall we? Human mistakes can be minimised, through something that you're already doing: learning. One of the main reasons that herd behaviour happens is that people don't really know what's happening to an asset at a given moment. By being educated, especially in economics and business studies, (thank me later economics department) ,you'll be better able to make sense of news and trends in prices. Meaning you'll be less inclined to follow others, and I instead making your own choice. Sure you can still make the right choice, but at least now you're less likely to.
Also, I kind of lied to you about EMH, sorry about that, but you'll forgive me in a bit, I promise. I mean EMH is a hypothesis and not a law for a reason: it's not perfect. Before I explain flaws with it I want to delve a bit deeper into EMH, call this Explaining Economic Theories: Return of the EMH (to be followed by The Revenge of the Return of EMH)
There's three sub sections to EMH: weak, semi-strong, strong (inventive I know, guess it's a trait of economists). All three operate on the theory that asset prices reflect publicly known information. Weak is only when asset prices prices reflect publicly known information, semi-strong adds the idea that asset prices instantly adjust to new information, and finally strong adds that insider information or hidden information is also reflected on asset prices. There is also one basic assumption that EMH makes: that on the whole investors are 'rational' (I really don't like the use of that word in economics, but that's another matter for another time). What that means here is that on the whole people make the 'right' reaction to a piece of information. This allows people to deviate from the 'right' decision but that the majority don't. In essence it means that investor's choices can be described with a normal distribution curve with respect to the right choice being made.
The problems, oh the problems. Personally I'm not really a believer of EMH, it's in my opinion one example of how economics has started to stray from reality. For example, one of the proven ways to beat the market: informational time lag (informational asymmetries if you want to get fancy). Some institutions do this, by using supercomputers. They write computer algorithms that check the news constantly, predict how the market will respond and buy and sell accordingly. If semi-strong EMH is true then this shouldn't even be possible! If true, the prices should have instantly adjusted, and no one should be able to take advantage of this time lag.
Yet another example of beating markets (some would say) are hedge funds, many of them make profits that are greater than average market returns. Of course one would argue that hedge funds succeeding are a matter of chance, that of the sea of investors out there they are the ones that got lucky. The counter argument to that counter argument against my counter argument of not being able to beat the market (WE NEED TO GO DEEPER!) is that the fact that so many hedge funds have made a greater than market average profit has to mean something. That this group's success doesn't follow a normal distribution curve. What are you waiting for? Join a hedge fund! If you have millions of pounds just ready to be invested (they're kinda exclusive, like a rich kids' earn more club).
Remember bubbles? Well you can actually use them to earn money. Through a mechanism called short selling, where you basically borrow shares from a lender and bet for the price to drop to make a profit. Think of it like this: I borrow a rock and sell it for £20 (it's one fiiine rock), for some strange reason people lose appreciation for rocks and the price drops to £15. I buy a rock now for £15 and return it to the lender and just like that I've earned £5. Well if you see a bubble starting to burst, you can short the market, sell for a high price, and buy back and return at a much much lower one, profit. Except that you have to get the timing spot on, a little off and you can lose money instead of gain.
To conclude: there is no sure-fire way to beat the market. If there was, we'd all be rich enough to swim in pools of fifties. You can try joining a hedge fund, short selling when a bubble bursts, use supercomputers to take advantage of time lag, or make wise and informed investments, none of them are guarantees. What is guaranteed however is chance, even if you randomly select a stock, there's a chance it'll outperform the market. In fact, according to a study which simulated monkeys throwing darts at a board to chose a random stock. Those monkeys outperformed the market by a margin of 1.7% when compared to the market average. If a monkey can do it, why can't you?
