It's not the market that I want to beat

Beating the market would be nice. But, realistically, why should I expect to beat the market when so many professionals fail to do so? I don't have their training or resources and I have a very full time job. The only way I am going to beat the market (other than through luck) is to cheat and invest in things which fall outside the "market" that I am comparing my performance to. As an example, I might compare a portfolio that includes emerging market stocks and commodities with the S&P500 index. That is not an apples to apples comparison but it is still a valid one for the purpose of deciding whether to continue to manage my own investments or to passively put my money into index funds and periodically rebalance.

Even though my objective is not to beat the market, there are plenty of things I do want to beat:

(i) under performance: if I consistently under perform, then it is time to rethink my investment strategy. Of course the difficulty in accessing low cost no load index funds makes investing in the market a challenging exercise;

(ii) inflation: if I fail to generate real returns over time, then something is seriously wrong;

(iii) the fees, charges and expenses of financial intermediaries (well, as many as possible): I'd rather the money was in my pocket working for me. Unless the intermediaries are going to add value, they are a drain on my wealth;

(iv) reliance on welfare in my old age: the real value of social security will continue to decline. It has to. That makes it unsafe to rely on anyone in my old age;

(v) lifestyle erosion due to financial constraints: once I retire, it is essential that I do not have to worry about downgrading my standard of living ;

(vi) my own bad judgement calls: I have made enough bad investment decisions in my life to know that I will make some more bad ones in the future. Getting caught up in the euphoria of a boom is easy to do - resisting the urge to throw money at the market in expectation that someone else will be the greater fool is not as easy as it sounds. That said, I am getting better at controlling my emotions as I age.

Certainly, many people do beat the market and the many well reasoned challenges to the efficient market hypothesis make it tempting to try, but the blunt reality is that I have neither the time nor the skills to justify trying to do so. At least not through judgement based market timing or stock selection (not that I am allowed to trade individual stocks). There are other ways to enhance returns.

Another way of looking at things is that I do not really care if I "beat the market" or not. What the market does is largely irrelevant to my investment objectives. I am interested in only one thing - generating returns which are sufficient to enable me to retire in 3-4 years time and support my desired lifestyle without drawing down my capital during that retirement. That said, if I consistently under perform the market, then it is time to simply buy the market in the cheapest manner possible and develop some new vices. Until then, I will pursue my investment objectives with as little fee paying assistance from the financial services industry as possible.