I recommend that before setting out to beat the market, you worry about whether you’ll be able to do as well as the market. The typical investor does worse than the market averages, usually due to buying more when the market is high than when it is low. Take a few minutes to imagine that you will be influenced by the mood of other investors to be pessimistic when the market has been doing poorly, and optimistic when the market has been doing well. Also imagine that you will have more money available to invest when the market is high than when it is low. If you’re confident that you can avoid these problems, please stop reading this post – you’re either good enough to not need my advice, or deluded enough that you ought to start somewhere else.

The efficient market hypothesis is an approximation that is good enough for many purposes, such as telling you that you shouldn’t be confident that you can beat the market by much unless you’ve got a really good track record [1].Many people infer from this that any effort to beat the market will be wasteful. Why do I disagree?The simplest answer is that if there were no inefficiencies in the market, the people who are making the market efficient wouldn’t have incentives to continue doing so.

Diversifying across countries reduces some hard-to-measure risks. One of the most thoughtless mistakes investors make is to invest mostly in stocks of their own country, when it makes more sense to underweight the country whose economy their other income is most correlated with. Betting on one country might make some sense if you have good reason to think it will do better, but you’re more likely to do it for signaling purposes or due to availability bias.

Note that most fund managers are experts at something. But that something is typically some form of “doing what the customer asks”, not beating the market. Amateur investors who try to pay experts to beat the market usually fail by mistaking luck for skill.

-Bayesian Investor Blog