Stock returns are positively skewed over an extended period of time. Randomness holds [bell shaped normal curve] only on the first period. Sharing the graph from Farago- Hjalmarsson study of 2022-
It happens because good investors of one time period has a better chance of doing good in next periods (to hell with the efficient market hypothesis). Well, ultimately the return curve over an extended period of time looks like 80-20 curve (power curve). Hardly 20% of investors can beat the average.
Even among the 20% winners, power law operates. 80% of those 20% can merely beat the market with 1-2-3% margin which may not be sufficient to take the stock picking endeavour. 4% of the investors [20% of 20%] can beat the market handsomely, 1% can be extremely extremely successful and a few will be outliers like Rakesh Jhunjhunwala.
Thus, most of the people not beating the index is a statistical certainty.
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