So You Want to Beat the Market

Last updated July 26, 2022my-stock-portfolio-2017-i-beat-the-marketThe average active trader gets beaten by the market most of the time. So what should you do if you don’t want to invest in a simple S&P index fund and/or don’t have enough money to make a meaningful return? The easiest way to beat the market is to simply not play it. When stock market traders try to chase the returns, they sometimes forget that equities are not the only way of making a decent return. If you aren’t a hedge fund magnate and have a smaller amount of money to work with, you’d be surprised at the investment opportunities that are available to you. It is much easier to get a higher percentage return if you have a smaller amount of capital to work with because the opportunities to double your money with $1,000 are much more available than the opportunities to double your money if you’re working with $100,000.

If you have a small amount of capital to invest with, it might be useless to invest in the market at all. To answer this question, one must ask themselves, “How good would it really be if I made 8% on (my money) this year by investing in the market?”. If you stand to gain a relatively little amount of money but have the chance to make that 8%, you’re most likely better off keeping the cash and waiting for a better opportunity. If you’re absolutely sure that you would want to wait a year for, let’s say $80 on a $1000 investment, then go for it. It is my opinion, however, that one could easily make more than $80 in a year using $1000. Perhaps you have a friend that needs a loan? Or, one of my favorites, could you become a “liquidity provider” and buy stuff from people on eBay who are discounting their items because they need quick cash and then list that same discounted item back on eBay for a reasonable price? Whatever your method, I believe one could easily beat an 8% market return through other means if they have a relatively small amount of money.

Case Study: I recently bought a Swatch “BAISER D’ANTAN” from a seller on eBay. It caught my eye when I saw the listing, as the watch was in good condition for a pre-owned watch. I asked some questions about the watch to the seller and he agreed to sell it to me for $26 with free shipping. I had a coupon for 10% off so I really paid $23.40. Now, I have not sold this Swatch yet as I’ve come to like it but the fair value of the watch is far greater than what I bought it for. Now, I came upon this listing on accident. The opportunities for someone to find deals if they’re actively looking and bidding on auctions are immense. It’s extremely easy to make a decent return with this method if you are patient and know when to pull the trigger and buy.

I ended up keeping the watch, it grew on me.

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