“If markets were rational, I’d be a waiter” – Warren Buffett
If the markets were efficient Warren Buffett would be a waiter and not the richest man in the world and Paul Tudor Jones wouldn’t be a billionaire. The traders and the investors that beat the market in the long term had an edge. Warren Buffet bought the best companies at the best prices. Paul Tudor Jones traded with tight risk management and created great risk/reward ratio trades at the beginning and end of trends and also traded with trends at the right time.
The market can be beaten no matter what college professors say about efficient market theory. Michael Covel showed how Trend Following traders did it in his book “Trend Following” over decades. Jack Schwager showed how certain market wizards beat the markets consistently.
If you are a trader or investor you can do better than market indexes and buy and hold investors. There are simple moving average trend trading systems that can beat the market. The key to beating the stock market is to maximize gains in bull markets and minimize losses in downtrends.
The majority of people can’t beat the market because they are greedy at the end of bull markets and buy too late. The majority of investors exit after corrections and miss getting back in. The market is difficult to beat because people have to go against their basic emotions and follow a proven system with a plan to win.
Traders lose money by having opinions instead of following price action.
Warren Buffet beat the market.
Paul Tudor Jones beat the market.
George Soros beat the market.
Market Wizards beat the market.
Trend Followers beat the market.
Once you beat the market over several years you will believe that you can. Once you know you can beat the market then you are just waiting for the right trend or market environment that is conducive to your system.
Once you know a way to systematically beat the market then it is just a matter of following your process and waiting for your edge to play out.