Many investors have walked through the doors of wall street with passion, greater than average intelligence and the ability to perform research. Many of them lost money.
Losing money though, is not the only cost to underperforming the market. To underperform also means to have wasted your time and effort, the opportunity cost of your minimum alternative return, and perhaps you have tarnished your reputation as well.
It is therefore imperative that the active investor, wishing to beat the market, must be conservative enough not to ever do worse.
Connections
Accept You Don’t Know The Future And Let That Guide You
Link Explanation: The cost of underperformance is higher than the investor might quantify in their financial results. You also wasted your time and effort. If you want to be an active investor, you have to realize this. The risk you are taking is large and the cost of failure high. The linked note is associated because true recognition of risk should lead to humility, which in turn should assist you in making intelligent decisions, which in turn, potentially, may lead to outperformance. It could be a virtuous cycle, but it starts from the acceptance that what you are trying to do is hard, not gambling or easy money.