sport football: Beating the Market Is Easy if You Know This One Trick

January 13, 2025 | Listen Online | Read Online

Beating the Market Is Easy if You Know This One Trick

Peter Lynch is one the greatest money managers of all time.

Between 1977 and his retirement in 1990, his Fidelity Magellan Fund averaged 29% annual gains. That's a compound gain of 2,640% over 13 years – which would turn every $10,000 into $274,000.

That's more than double the gains of the S&P 500 over the same period, making it the best-performing mutual fund in the world.

The best part about his fund was that there was no barrier to entry. It was open to all investors – large and small.

All you had to do was buy his fund… Go about your life… And you would've made 27x your money.

With a track record like that, I can't blame you if you thought the average investor made a fortune by buying Lynch's fund.

But you would have been dead wrong.

The average Fidelity Magellan investor actually lost money.

While the Magellan fund averaged 29% annually, it still experienced volatility throughout the year. One month it might have been up 5%, and another month it might have been down 12%.

"Investors" (I use the term loosely) would panic-sell the bottom and panic-buy the top.

That's why even when they had access to one of the greatest wealth managers of our time, they still lost money.

Here's why I'm telling you about Peter Lynch…

Over the last eight years, I have absolutely crushed the average stock market returns. Some of my biggest stock winners include Nvidia in 2015, Tesla in 2019, and Broadcom in 2021.

Since I recommended them, they have appreciated as much as 16,632%, 2,607% and 397%, respectively.

In crypto, I've done even better. I've recommended 28 coins that have risen over 1,000%, including some rising as much as 150,000%, 54,000%, and 28,000%.

In this essay, I'll explain why most investors fail at making money over the long term. And the one trait you need to develop to overcome this mistake.

The One Trait You Need: Forgetfulness

Over the winter holiday break, I listened to an excellent interview of Morgan Housel by Dr. Andrew Huberman.

Housel is a New York Times bestselling author of The Psychology of Money and Same As Ever. (I highly recommend both books.) MarketWatch named him one of the 50 most influential people in markets.

Huberman is a neuroscientist and tenured professor at Stanford University. He hosts the Huberman Lab podcast. He has a knack for explaining highly complex brain science in an easily understood way.

During the podcast, Housel referenced the famous 1970 Stanford Marshmallow Experiment on delayed gratification.

The experiment is simple. An adult offers a child one marshmallow. The child could eat the marshmallow right away… Or wait 15 minutes and receive two marshmallows.

The adult left the room. And the child was left staring at the marshmallow.

All they had to do was sit still and wait 15 minutes, and their one marshmallow would turn into two marshmallows.

Scientists have long pointed to this experiment as an example of how delaying gratification could predict financial success.

Housel has a completely different take...

He said the children who ate the marshmallow within 15 minutes were absolutely focused on not eating it. And the more they focused on not eating the marshmallow, the closer they got to eating it.

They would poke it, smell it, touch it. And then before they knew it, they were eating it.

He argued that the children who avoided eating the first marshmallow were not endowed with superhuman will power.

Rather, they ignored the marshmallow and the promise of a future marshmallow. Instead, they played with their shoelaces or sang. One child even fell asleep.

Long story short: They focused on enjoying their present moment and didn't give any thought to the marshmallow in front of them or the "reward" of a future marshmallow.

They "forgot" about the marshmallow.

That's how they "won" the game and got two marshmallows. Paradoxically, "forgetting" about the reward made it far more likely they'd receive it.

This brings me to why the investors in Lynch's Magellan fund did so poorly even though the fund itself was wildly successful.

They were too focused on watching their investment in Magellan. But they would have been far better off forgetting about their investment.

They could have done literally anything else instead of watching the price action and they would have made more money.

The key takeaway I got from this interview was that watching your investments is a terrible investment strategy. It actually makes you poorer.

Bitcoin offers us a similar experiment with a twist.

The first marshmallow is the initial money we put into bitcoin. Instead of getting just one marshmallow back, though – depending on how long you're willing to wait – you might get back 10, 20, or even 100 marshmallows.

The best way to avoid the marshmallow mistake is to simply forget about the investment. Buy the asset. Then go live your life. That's it.

The folks who have been able to do that with bitcoin have made life-changing money.

Putting just $1,000 into bitcoin when I first recommended it in 2016 would have been worth as much as $270,000. That's an annual compound growth rate of 86%.

But how many people still own bitcoin without touching it since I first recommended it? How many panic sold when bitcoin dropped? How many panic bought back in at the top only to then sell the next bottom?

I know this is easier said than done because unlike the marshmallow test where the first marshmallow lay in front of the child intact…

With bitcoin (or any high-growth investment) you might see 50%-80% of your first "marshmallow" disappear while you wait for 10 or more marshmallows.

Understandably, there would be very few children who could sit through that without gobbling up the first marshmallow, unable to trust that more would follow.

But this should be much easier for adults because we have history to guide our decision making.

All you have to do is wait. And that's part of what I mean when I say, "Let the Game Come to You!"

When you hold great assets, it pays to be "forgetful" and just let time do the heavy lifting for you.

This is the mental model I have used and shared with my subscribers that has kept us in bitcoin from $400 and change to $100,000 and beyond.

How To "Forget" About the Marshmallow

Volatility of your returns over the short term is an essential ingredient to making a lot of money over the long term.

That's true even if you are Warren Buffett.

You must make peace with this market reality. If you can't, and you still insist on investing in financial markets, you will consistently sell the bottom and buy the top.

The way to manage your fear of short-term volatility is by getting clear on your own personal time frame, history of the asset you are investing in, and position sizing.

Ask yourself, "When will I need this money I am investing?"

If you need the money in less than four years, don't put it in stocks or bitcoin… Because chances are – at some point within that time frame – you'll see a big drop.

Buy some bonds instead.

Alternatively, you can reduce your position size to a level where even if the asset you buy drops 50%, you won't be compelled to sell it out of fear.

Only you know what level is best for your circumstances.

When it comes to bitcoin, we know that every four years, it explodes in value and then plunges in value.

But even if you had bought bitcoin at the peak of each of its previous bull cycles – as long as you waited about four years – you were back in the black, making money on your investment.

We fret, and we worry, and we try to time our entries and exits… when all we need to do is just buy bitcoin and forget about it. But that only works if you don't need the money right away.

So, you need to do some work on figuring out how much you can put aside in your investments without panic selling when they drop 50% (which they will certainly do at some point, stocks included).

Once you do that, simply make your investment, and then forget about it.

Don't watch it. Don't read the financial news. When you start worrying or fantasizing about future returns, just say to yourself, "Stop staring at the marshmallow." And it will redirect you to take your mental focus elsewhere.

That's why I recommend you just go live your life. Have dinner with friends. Enjoy your family. Get better at the core skills of your job or train in new skills for a better job.

Focus on building loving relationships with your friends and family. Take action to improve your physical health. Focus on becoming a healthier and more pleasant person to be around.

In short, have fun living your life, forget about your investments, and let time do the heavy lifting for you.

P.S.: A New Way to Harness Short-Term Volatility

In investing, there are two ways to make money. Long term set-it-and-forget-it, like outlined above. And short-term trading.

Both have benefits. But folks get in trouble when they treat their long-term money like short-term money.

It's imperative you separate the two because a lot of money can be made trading short-term volatility, but it requires a completely different approach.

That's why after correctly predicting President Trump would be reelected last year, I'm going public with a new prediction that could have vast implications for your wealth in 2025.

I believe as early as his first day in office, President Trump will trigger a massive melt-up phase in the crypto markets… Creating a rare window for you to turn a handful of $1,000 investments into your Freedom Number.

That's the amount of money you need to do what you want, when you want, with whomever you want.

Now, these moves will be historically fast and short-term in nature. I'm talking about 50%, 100%, even 200% in days instead of months.

So here's the critical part you must understand…

The moves in 99% of those coins will be temporary. And because of the unusual nature of these moves, you can't use traditional methods of investing in crypto.

That's why tomorrow night at 8 p.m. ET, I'm hosting an urgent strategy session to reveal a new method to capture the meat of these fast-paced moves. It's unlike anything I have ever spoken to you about before.

It's called Freedom 2025. All you have to do to reserve your seat is go here.

During my briefing, I'll explain why this new Trump bull market will NOT play out like most people expect. And if you don't know what to do, you could actually lose a ton of money).

Plus, I'll give away the name of a coin I believe could be among the best-performing coins during President Trump's second term, completely free of charge.

The last free pick I gave away during my December briefing went up as much as 54% in three weeks.

Friends, if you want to have the highest probability of reaching your Freedom Number within the next 12 months, you'll need a much more fast-paced approach this cycle.

Now, this approach is not for everybody… It's for big boys and girls… If you feel like these fast moves could give you a heart attack, I understand.

But if you have capital put aside and want to complement the traditional buy-and-hold strategies, I recommend…

Click here and let me show you how you can use this rare window of opportunity to turn a handful of $1,000 investments into your Freedom Number in less than 12 months.

Let the Game Come to You!

Big T