For example, you could hypothetically beat “the market” simply by selecting even one below average stock from the index and then removing that stock from your portfolio while keeping the rest. Are you saying that you could not find one dog given a list of every company in the index? That’s a hypothetical, since you may not have enough money to create your own index, etc, etc, but it’s an easy example of a way that you could probably beat the market.

If the odds are against you, why not go index fund and spend the time you would have used to study stocks and actually do something worthy like a charitable event, spend time with your family, or work more (you can make more from increasing your salary than improving your return).

- Smug person who only invests in indices because people who stock-pick are foolhardy and stupid. Gets irate when you mention sub-30 tech IPO millionaires and GOOG.

- Smug stock investor who thinks indices are for uneducated sheep/babies. He is most likely making money, and like the highschool quarterback who “knows” he’s going to go pro, he “knows” he is smart enough to be in the minority that won’t go broke. Gets upset when you bring up Warren Buffet or the 100% unreliability of any form of charting.

- Real-estate evangelizer who thinks the market as a whole is for plebians, and that the “only sure path towards wealth” is owning property. Mention Miami, Fresno, or Tokyo and he’ll never visit your site again.

To end my comment on an entirely hypocritical note, I like to think I split the difference of those three categories. For my retirement investments and the bulk of my net worth, I invest in index funds. I like stock-picking for the same reason I like blackjack and Vegas; I know the odds are against me, it’s mainly just for fun and excitement, and I never buy a stock without making sure that if it pulls an Enron or Bear Stearns I’ll be fine losing 100% of that “investment” (read:gamble). Oh, and sure, I’d like to own rental properties eventually…however the concept that somehow real estate is some magical sure-bet is laughable.

Talking about investing is a lot like talking about sex. Not many like being told when they’re wrong, most think they’re doing it the best way, and few want to look at themselves in a mirror to stoically see what’s going on.

I own some financials and I’ve had them for 10 years. I’ve bought some financials more recently, too. And I have to say I’ve been like this guy and wondered if I shouldn’t sell. But I keep telling myself…long term, you made this decision for the long term. You researched this decision based on long-term. It’s no different than the indexes I own – long term. If I wanted to turn a fast buck I’d head down to the casinos.

That means that there may be 10% or 20% who can beat the market. Maybe you’re in that 10% ot 20%, but the most likely you’re not, and your chances don’t improve with more knowledge.

The analogy to learning to walk is seriously flawed. Walking is learned by every child — every creature on this planet with legs — based on instinct and imitation. That’s a very low-level motor function, so far removed from decision-making based on perceived information. Your point is to show that more practice is necessary before you can truly evaluate whether “thinking” (evaluating and making trading decisions) will be beneficial to your performance, but the data already show that practice and experience will not make a difference in the long run. Otherwise stock brokers wouldn’t be required to say “past performance does not indicate future results.” They would say, “We’ve learned how to beat the market and will guarantee that we will continue to do so,” and the SEC wouldn’t mind.

I can duplicate the study by taking a bunch of babies and notice that when they are just learning to walk they fall down a lot and get hurt more than when they just crawled. In fact, if you take the average of all humans (the index) you will notice that the babies all do much worse. They should just just give up and continue to be carried by their mommies and daddies (the index) because they clearly are not as successful.

You just don’t know what you are doing, and until you learn you won’t do well. But you don’t have to assume that people can never do well just because the majority don’t.