3 Ways To Beat The Market, by Charles Ellis

3 ways to beat the Market - Charles Ellis - Sweat Your Assets

I am not one of those trying to beat the market. I instead try to “be in the market”  and “be the market”. What does it mean? It means to stay invested no matter what (be in the market), through a broad and well-diversified portfolio (be the market). In this way, I only chase returns in line with my risk appetite and goals, rather than trying to outperform a market benchmark (ex. S&P500 or MSCI World Equity).

However, there is wisdom and lessons to be learned, readying how wise investors and investors’ advisors cover this popular and exciting topic: How to beat the market! One of the voices I listen to in Personal Finance and Investing is the excellent Investment Advisor and Author Charles Ellis.

To know more about him, check out this link to my Youtube Channel for one of his historic interviews on How to win the loser’s game.


 Charley Ellis once described the three ways in which investors can beat the market. He said:

“One is physically difficult, one is intellectually difficult, and one is emotionally difficult.”

You can work harder, put in more hours, and outwork everyone else. You can be more intelligent, see the future differently, and better identify when the market is wrong. You can be better behaved, take a long-term investment approach, and hold on.

Unfortunately, most investors focus on the first two, trying to outwork or outthink everyone while overlooking better behaviour. However, more effort and intelligence still require better behaviour to succeed at investing. Ultimately, every investor must walk the emotionally tricky path. As such, the behavioural advantage exists for everyone willing to take Ellis’s emotionally difficult path:

Being incapable of doing the intellectually difficult, and reluctant about the physically difficult, I have set about the emotionally difficult approach to investing. This straightforward, untiring approach is simply to work out the long-term investment policy that’s truly right for you and your particular circumstances and is realistic given the history of the capital markets, commit to it and — here is the emotionally difficult part — hold on.

Long-term investing is fraught with short-term turmoil. However, those investors able to navigate the natural boom and bust cycles achieve a behavioural advantage over others. A systematic investment process combined with discipline is key to superior results.

Keep It Real. Sweat Your Assets.


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