The Wall Street Journalused to have a regular feature where they'd ask stock-picking pros to pick the individual company they believed would outperform the market in the next three months. Then they'd chuck a dart at a list of stocks and see whether the pros could beat the randomly selected stock.
The dart often won. And the lesson was clear: Even the pros have a tough time picking the next killer stock.
That S&P 500 annual return of 9 percent Harding mentioned isn't nearly as thrilling as the stock that doubles in value days after you buy it, but investing in index funds that track sectors or the entire market is generally the best strategy, especially if you don't have hours to spend watching the market and running analytics every day.
"It’s important to note that everyone is trying to find the companies with an attractive outlook better than that of the market,” Harding said. “However, this is pretty unlikely and we can review the failing track record of the most intelligent minds in math, economics and finance to help justify this opinion.”
He adds: “Instead, focus first on the market risk by buying broadly diversified funds while mitigating the individual business risk. This may prevent the investor from hitting home runs, but it will also reduce the likelihood of striking out. In ten at-bats you’d much rather string together ten consecutive singles than five home runs and five strikeouts."