A former hedge fund manager says retail investors are no more sophisticated than they were 30 years ago. He meant it as criticism. Retail investors will screenshot it and call it validation.
Thirty years ago, you bought a stock because your brother-in-law yelled about it at a barbecue. Today you buy a leveraged ETF because a man in a car yelled about it on TikTok. The barbecue is gone. The yelling remains.
The advice is simple. Buy a broad market index fund. Hold it. Die with a number in an account that you never touched.
You hate this advice. It has no ticker you can brag about. It has no story. Nobody at Thanksgiving leans back and says, "I owned the whole market." They lean back and say, "I'm up 40 percent on a product that resets daily and that I do not understand."
Complex ETFs are the best part. Someone built a fund that holds options on swaps on a volatility index. Then you read three paragraphs of the prospectus. Then you stopped. Then you bought it.
Sophistication would mean reading the prospectus. You have the same skill set as a 1996 day trader, plus a phone that lets you lose money during a funeral.
The index fund will beat you. Not because it is clever. It is a bucket. It holds everything and does nothing, which is the one trading strategy you have never survived.
You are not sophisticated. You are a golden retriever with a brokerage account, and the retriever would at least stop chasing the car.
Photo by Anne Nygård on Unsplash
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