Key insights
- The author argues that retail investors underperform not due to lack of information, but due to the absence of a structured investment process compared to professionals. The proliferation of trading tools aimed at retail investors focuses on access rather than providing frameworks for investment thinking, hindering their ability to achieve consistent performance. This lack of process leads to improvisation and ultimately poorer results.
Something I've been thinking about, and I'd be curious if anyone else has landed in the same place.
The financial industry has spent the last decade selling retail investors more access. Zero commissions, fractional shares, extended hours, options, crypto, pre-market. More ways to move money faster. Which is what it needs from us.
None of it addresses what we need from it.
Pros and retail aren't separated by information. We can read the same 10-K. We can pull the same data. The gap is process. Pros have a repeatable framework they run on every position. Retail improvises.
An endless loop of improvisation never leads to quality performance. A person who runs marathons doesn't have better information than someone who can't run a quarter mile. They have a better process.
The thing I keep coming back to: most "investing tools" pitched at retail are screening tools, signal tools, or trading tools. Almost none of them are thinking tools. The market is over-served on access and under-served on framework.
Curious if others have landed in the same place. What does your own process actually look like or have you also been improvising?