When talking about investing you need to read Kahnemann. The entire Thinking Fast And Slow book is very, very good but the relevant part is at https://acquirers

When talking about investing you need to read Kahnemann. The entire Thinking Fast And Slow book is very, very good but the relevant part is at https://acquirersmultiple.com/2018/04/daniel-kahneman-the-illusion-of-stock-picking-skill/ https://acquirersmultiple.com/2018/04/daniel-kahneman-the-il... > Our host, a senior investment manager, had invited us to discuss the role of judgment biases in investing. I knew so little about finance that I did not even know what to ask him, but I remember one exchange. “When you sell a stock,” I asked, “who buys it?” He answered with a wave in the vague direction of the window, indicating that he expected the buyer to be someone else very much like him. That was odd: What made one person buy and the other sell? What did the sellers think they knew that the buyers did not? > Nevertheless, the evidence from more than fifty years of research is conclusive: for a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker. > More important, the year-to-year correlation between the outcomes of mutual funds is very small, barely higher than zero.