Illusion of Outperforming the Market
Author introduces the concept of "speculative return," which arises from changes in market valuations (like price-to-earnings ratios) and is distinct from the "investment return" generated by dividends and earnings growth of businesses. While speculative return can drive short-term market fluctuations, long-term investment returns are primarily driven by business fundamentals.
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The book discusses powerful and well-supported case for the superiority of low-cost index fund investing as the most effective way for the vast majority of investors to achieve their long-term financial goals.
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Similar ideas to Illusion of Outperforming the Market
The three stages of bull market
• The first, when a few forward- looking people begin to believe things will get better
• The second, when most investors realize improvement is actually taking place
• The third, when everyone concludes things will get better forever
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