Investment Blunders of the Rich and Famous...and What You Can Learn from Them

Part 2. Trying to Beat the Market

To most people, using an indexing strategy seems like a strategy destined to be average. Most people think of themselves as above average. If you view yourself as an above average investor, then you are probably motivated to beat the market, not join it!

Joining the market entails passive investing. However, to beat the market, you must take action. The more actions you take, the more likely it will be that your emotions and other psychological biases will flourish. One method of trying to beat the market is an attempt at market timing. However, if the professionals at Fidelity Magellan, Brandywine Fund, and numerous investment newsletters can't do it successfully, you probably can't either.

The human desire to ...