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My whole life all I hear is how hard the next step is: Calculus is impossible...Mechanical Engineering is so hard...Physics 2 is too hard, take it at CC...Watch out for the Sr. Design class, it's killer...the CFA is impossible, you'll never pass...don't invest actively, you have to be Warren Buffett to beat the market...


Thanks for your well-thought post. And, for the record, I completely agree with you about people saying how impossible the next step is. In fact, this has been something I've been thinking about lately, and it annoys me when people say things are so tough. I'm still waiting to get to the "impossible" part of the finance classes I took this past year.

I know that you are a student at UVA, one of the top public Universities in the nation. I imagine that you are a pretty good student as well. Why would you settle for average if you have an interest in investing and you have shown that you are certainly in the top half or top quarter or top 10% everywhere else?

I do have an interest in investing- I enjoy reading about different schools of thought, and, of course, chatting it up here on TMF with everyone. The problem is, I just don't have the dedication to want to beat the market.

Now let me clarify that statement. Is beating the market possible? Of course. Is it difficult? Of course. Do I think that if I applied myself I could beat the market? I'm not sure- but I'm sure that I have just as good of a chance as Reginald Constance Huffington III, the new junior analyst at Goldman Sachs. My problem is that I really don't have the enthusiasm or the patience to want to beat the market.

I'm a gambler by nature. I love the thrill of letting it ride, chasing losses, and placing big bets. Fortunately, I'm smart enough to realize that this type of behavior doens't translate into good investing behavior. Furthermore, I just spent the past 2 years of school learning how to break down financial statements, do DCF valutions, value IPOs, etc. And, frankly, that stuff really doesn't interest me.

While I can work with numbers, I placed out of both college calculus and statistics, I just don't find them interesting. Furthermore, I recognize that with my type of behavior, I'd be inclined to drift towards day-trading rather than Buffett-like investing. Also, I want to eventually start my own business. Once I get that rolling, I'm not going to have time to sit around brwkaing down financials to see if I should sell, buy, or hold.

I recognize my own limitations, and accept that fact that I may not be Warren Buffett. Now let me once again state that I agree with you about things not being impossible, but there's a fine line between not backing down to people and being irrationaly stupid (I think you're on thr right side of this line, but the majority of Americans are not). I believe that many people will use your line of thinking to say "hey, I can beat the market" and then procede to flush their retirement savings down the toilet.

This brings me back to the point of my original post, which is that indexing isn't for the less-intelligent. It's for those who have the strength, and I daresay, and the intelligence to recognize their own inherent limitations. I'll say once again that averages are created b/c most people are below that average. I'd rather spend my time on things that matter more to me, like building relationships and building a business (once I graduate). And, I think someone's life savings is too high a price to pay to learn that they should have stuck to indexing.


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