Canadian businessmanKevin O'Learybelieves there is virtually no one who can beat the stock market by picking individual stocks over the long term. Outperforming the S&P 500 is difficult, although he is aware that some investors may still be stubborn enough to attempt it.
O'Leary recognises that there will always be investors who are unlikely to listen. Some will continue to try to beat the market, a task that the 71-year-old believes is a waste of time.
Kevin O’Leary says almost nobody can beat the S&P 500 by picking individual stocks“If you think you’re so good that you can pick stocks and beat the index, give it a try and learn the hard way. Virtually nobody beats the index”“What you should do is make it easy for yourself.…pic.twitter.com/qM9qwn7eIw
'If you think you're so good that you can pick stocks and beat the index, give it a try and learn the hard way. Virtually nobody beats the index,' O'Leary said on X.
For those who may not be aware, the S&P 500 tracks the performance of the largest US-listed companies. That said, any investor would have to carefully study each listing to figure out where to invest wisely. This approach is what O'Leary believes most are doing wrong.
Aware that most may not take his word for it, the businessman suggested a strategy. He encouraged investors to take a simple SPY test and see what happens afterwards.
'Maybe put $1,000 into one account where you pick stocks, and another $1,000 into SPY, the ETF that tracks the entire S&P 500,' O'Leary said. 'Then you'll find out the hard way that you're not that good. 90% of the time, you can't beat it, so you might as well join it and stop trying to pick stocks,' he added.
O'Leary is aware that there are some investors who feel they are gifted enough to properly read the market and make risky calls. In some cases this may happen with some finding success in selecting certain individual stocks. However, O'Leary points out that these are only short-term gains and maintaining such a practice is extremely difficult.
Rather than continuing with this approach, O'Leary believes it would be better to invest in the market as a whole rather than trying to outperform it. Instead of attempting to select individual winners, he believes investors would do well to buy exposure to the entire market.
O'Leary sees this as something that guarantees a market-level approach, a practice that is historically effective compared to short-term returns.
Source: International Business Times UK
