i can cure chartists, page-107

"The "market" is zero or negative sum on average - sure. Not zero or negative sum for individual participants"


Essentially correct, except there are several issues.

1) The *aggregate* return for all investors cannot exceed the 'market' return (using the term market loosely, I actually means the assets which comprise a market).

2) Trading the 'market' is zero-sum, as i does not increase the *aggregate* return. (trading actually reduces the theoretical maximum return due to transaction costs

3) Despite the fact that many claim to be able to generate returns greater than the market for long periods of time, very few achieve it.

4) It is not impossible to achieve returns greater than the market, but this can only be achieved if there are other investors/traders who will make commensurate loses (because as we have discussed the *aggregate* return is fixed and you cant defy the laws of nature

5) Therefore, if everyone was simply happy to passively own 'the market' everyone would make the same return. Superior returns can be achieved by a combination of two factors :

a) Hold a subset of the 'market' assets which rate to perfrom better (ie develop Buffett like skills) and let others own the inferior assets

b) Get on the right side of 'timing' your trades. And hope that other who attempt this get on the wrong side. Because as we discussed earlier, outsized returns, require outsized losses by others.