SerpApi.Org
Charles Schwab strategists recently announced that we’re entering a period in which it will be difficult to make money in stocks.
They could be right. But they’re wrong to believe it was ever any easier. The “era of easy gains” they think is “officially over” never existed in the first place.
It’s important to make this point because people often make the past seem more predictable than it really was. As soon as something happens, we tell ourselves that it had to be that way — and that it was obvious to anyone paying attention.
Stonepeak’s Luke Taylor breaks down the forces that make infrastructure an attractive investment amid geopolitical conflict, inflation and uncertainty.Even investment professionals are prone to this rewriting of history. Investors are seeking certainty from the experts, and rather than disabuse them of those mistaken hopes, the pros often reinforce them. Otherwise they risk losing customers to financial advisers who act even more sure of themselves.
These habits of mind are dangerous because they lead us to take more risks than are prudent. If making money were as easy as we make it seem when we rewrite history, then why diversify or hedge your bets?
Take this year. Imagine that it’s New Year’s Day and you’re trying to predict the stock market’s performance for the first half of 2026. Now imagine that you know in advance that at the end of February, a war in the Middle East will start and will still be raging in July.
Against that uncertain backdrop, most people would expect the stock market to be well below its Jan. 1 level by now. They’d expect gold (the classic geopolitical hedge) to be higher and the yield on the 10-year Treasury to have declined as demand soared (reflecting a flight to safety in U.S. Treasurys).
In fact, all of these expectations were far off base. The S&P 500’s total return for the first half of 2026 was 10.2%, twice its historical average. Meanwhile, gold lost 7% and the 10-year Treasury yield rose 0.26%.
For perspective on whether making money in the stock market was ever easier, consider the accompanying chart. It shows the percentage of large-cap, actively managed U.S. stock funds that beat the S&P 500 in each of the past 25 calendar years. The results prove that it’s always hard to beat the market.
We know this because of the findings of William Sharpe, the 1990 Nobel laureate in economics. In an article published nearly four decades ago, Sharpe proved that active managers, on average, will consistently lag broad market indexes — and that this conclusion depends “only on the laws of addition, subtraction, multiplication and division. Nothing else is required.” That’s because the market is a zero-sum game before transaction costs, and a negative-sum game after transaction costs.
The bottom line? Be wary of any market expert who acts too confidently about what they can deliver.
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at [email protected]
More: SpaceX gave investors intense FOMO. Now the decade’s hottest IPO represents a brutal reality check.
Also read: Running out of money is not the saddest retirement mistake you can make. This is.
