Can I Beat The Market

I spent large part of last 3 months in building a software that tracks and captures the stock movements on NSE. It runs every day and upload the data for each share, open, close, day high, day low, volume %, delivery %, 52 weeks high and so on. Another software in the background runs and analyses this data and throws up buy, sell, hold and average recommendations. It draws up its own candle stick charts.

I built this software with the argument that “I’m smarter than the others in the market. I can discover undervalued stocks, and when the market discovers them and they rise in price I’ll sell them. Then I’ll discover
other undervalued stocks and repeat the process all over again. I know that the stock market is highly efficient, but through my intelligence, my expert analysts, my computer programs, and my trading strategies, I can spot temporary inefficiencies and capture them, over and over again.”

I have realized that I have been rather foolish in assuming that I can beat the market by my toys. No doubt I tasted early success, but somehow I don’t see repeating this success on sustainable basis.

Like Newton discovered gravity long ago, people like me think that they could discover new ways of beating the index.

Real paradigm is that no one in the history of mankind has managed to beat the index on sustainable basis over 20 years.

There are heavily paid money managers, investment advisers, merchant bankers claim otherwise as the only reason for their accumulated wealth is your foolishness. With so much of the stock market’s volatility based on expectations (emotions) rather than business (economics), what else could we expect?

“I will double your money in 3 years or may be less. Suggest him a plan that will make him a crorepati.” Have you heard this? Yes, many times over, would be the reply of most of you.

We need to call on our own common sense that warns us that hindsight of becoming rich in no time plays tricks on our minds.

“The greatest danger to your dreams of getting richer is your dream
of getting more rich.” Stick to your plan to getting rich.

I have discovered for myself that index investing is the best way to realize riches. I invest in all NIFTY stocks, NIFTY Junior stocks as per their weight-age in the index. I have a SIP for IDFC Nifty Direct Plan. I put money in NIFTY BEES, JUNIORBEES and BANKBEES on regular basis. I toy with NIFTY covered calls to raise some cash for Dudh and Subzi.

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