Jasmine Birtles
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What Wall Street Won’t Tell You About Beating the Market
Ruby Layram
14th Mar 2025
The quest to outsmart the market has been around for donkey’s years! It’s a pursuit that has both seasoned investors and beginners alike burning the midnight oil, trying to figure out some kind of “secret”. But here’s a thought: Wall Street might not be spilling all the beans on how to actually beat the market.
In this post, we will dive into the nitty-gritty of what the bigwigs aren’t telling you and arm you with some savvy strategies to give your investments a proper boost.
The Allure of ‘Beating’ the Market
First off, why is everyone so obsessed with “beating the market”?
Essentially, it means earning returns that surpass the performance of a benchmark index, like the S&P 500 or FTSE 100. Sounds dreamy, right? But before you start envisioning yachts and private islands, know this: consistently outpacing the market is no walk in the park.
Wall Street’s Little Secrets
Now for the good stuff! Here are a few “secrets” (or at least, lesser-known tips) that Wall Street doesn’t shout about.
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Active management isn’t always your mate
Many Wall Street firms champion active management—think fund managers making rapid-fire decisions to buy or sell stocks. They’ll have you believe that these maestros can consistently outperform the market.
However, numerous studies have shown that active funds often underperform their passive counterparts over the long haul. High fees and the sheer unpredictability of markets play a big part in this.
While actively managed funds might be a good fit for some investors, they’re not for everyone! Read our guide on investment funds vs ETFs to understand more.
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Fees play a big role in your returns!
Fees aren’t exactly sexy to talk about – but they’re super important!
Ever noticed those tiny percentages shaved off your returns? They might seem insignificant, but over time, management fees, transaction costs, and other sneaky charges can seriously dent your earnings.
Wall Street isn’t exactly shouting this from the rooftops, but minimizing fees is crucial for maximizing your returns.
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The myth of the star stock picker
We’ve all heard tales of the legendary investor who struck gold with a single stock pick. While these stories are exciting, they’re more exception than rule.
Relying on hot tips or the latest stock sensation can lead to disastrous outcomes. Wall Street might glamorize these mavericks, but for the average investor, this approach is akin to gambling.
Strategies That Could Boost Your Returns
Now that you know what not to do, here are a few top tips that could help you to boost your returns!
Embrace passive investing
Instead of trying to outguess the market, consider hitching a ride with it. Index funds and ETFs that track market indices offer broad exposure with minimal fees.
John C. Bogle, the founder of Vanguard Group, was a staunch advocate for this approach, emphasizing that keeping costs low and staying the course often yields better results than chasing the next big thing.
Read our helpful guide to passive investing to learn more about this approach!
Diversify like a pro
Don’t put all your eggs in one basket. Spread your investments across various asset classes—stocks, bonds, real estate, and even commodities.
This strategy helps cushion the blow when one sector takes a hit. Recent market downturns have highlighted the importance of diversification, especially when previously high-flying tech stocks stumbled (we’re talking about Tesla and NVIDIA here!).
Keep emotions in check
Markets are rollercoasters, and it’s easy to let fear or greed drive your decisions. However, emotional investing often leads to buying high and selling low.
Establish a clear investment plan and stick to it, regardless of market noise.
Continuous learning
The financial world is ever-evolving. Commit to ongoing education—read books, attend seminars, and stay updated on global economic trends.
Understanding the broader picture can provide valuable insights and prevent costly mistakes.
While you’re here, why not sign up to our bi-weekly investing newsletter?
Be wary of consensus
Just because everyone’s jumping on a particular investment bandwagon doesn’t mean it’s the right move.
Following the herd can lead to overvalued assets and increased risk. It’s essential to conduct your own research and not rely solely on prevailing market sentiments.
Understand the power of compounding
Albert Einstein reportedly called compound interest the eighth wonder of the world.
Reinvesting your earnings can lead to exponential growth over time. Starting early and being consistent can significantly enhance your portfolio’s value.
Stay the course during corrections
Market corrections (a decline of 10% or more from a recent high) are part and parcel of investing.
While they can be unsettling, it’s crucial to remain calm and avoid knee-jerk reactions. Historically, markets have rebounded, and those who stayed invested often benefited from the recovery.
Question conventional wisdom
Not all widely accepted investment advice holds water. Books like “Jackass Investing” challenge traditional beliefs and encourage investors to think critically about their strategies.
Being open to unconventional approaches can lead to better diversification and risk management.
Final Thoughts
Beating the market isn’t about having insider information or making risky bets. It’s about understanding the fundamentals, being aware of the often-unspoken truths of Wall Street, and implementing strategies that align with your financial goals.
By focusing on low-cost investments, diversifying your portfolio, keeping emotions in check, and committing to continuous learning, you’re not just playing the game—you’re setting yourself up to win.
Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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