Index Investing and the Marriage Market Are Surprisingly Similar

It has been five years since I started investing.

The more I study, the more I find myself wondering about something.

"Why is it that even though most people know they cannot beat the market average, they still believe they are the exception who can?"

At first, I thought this was only about investing.

But before I knew it, this feeling that "I am different" started appearing everywhere—in my work, in raising children, and in human relationships.

—

Index investing is a mechanism for "quitting being human"
Index investing is said to be one of the greatest inventions in financial history.

There are professional investors in the market.

AI trades at high speeds, and vast amounts of information fly around every day.

Human greed and fear, as well as corporate growth and failure, are all woven into the price.

What remains at the end of all that is the "market average."

The interesting thing is that to keep receiving the market average return, it is more important than anything else not to be swayed by human greed or fear.

Don't be impatient.

Don't be greedy.

Don't be swayed by the news.

Just calmly continue with the rules you have set.

In other words, becoming mechanical enough to "quit being human" is often the best way to overcome human weakness.

—

"Average" is not mediocre
When we hear the word "average," we imagine something boring and featureless.

But in reality, it is the opposite.

The average is the result of absorbing countless successes and failures and being polished over a long period of time.

It survives even when the environment changes.

It avoids extreme risks.

That is why the market average outperforms many professionals in the long run.

A world where "normal" wins truly exists.

—

The pitfall of "normal" that also happens in the marriage market
Hearing this reminded me of the marriage market.

There is a phrase I often hear.

"I'm fine with a normal person."

At first glance, it sounds like a very modest condition.

But when you list the conditions, the story changes.

Average annual income.

Average looks.

Average personality.

Average educational background.

Average communication skills.

None of these are high expectations on their own.

However, when you try to find someone who meets all of them, the probability is not additive, but multiplicative.

Even if we assume each one represents half of the total population,

50% × 50% × 50% × 50% × 50%

What remains is about 3%.

You think you are looking for a "normal person," but you are actually looking for someone who is in the top few percent.

I find this number a bit ironic, yet somehow very human.

—

The filter of "I am different"
Why does this happen?

The reason is surprisingly simple.

It is because we see the world with ourselves as the standard.

I am average.

It is fine if the other person is average, too.

Even if we think that, we unconsciously stack up conditions that are convenient for us.

It is the same in investing.

You cannot beat the market average.

Even if you know that from statistics, you think, "Maybe it might be a little different for me."

This feeling that "I am the exception."

I believe this is a small bug standard-equipped in humans.

—

That is why I rely on a system
Of course, this bug is not necessarily a bad thing.

Hope, love, and challenges all begin because of this misunderstanding.

However, money is a little different.

Judging only by emotion is likely to lead to major failures.

That is why, so as not to trust myself too much, I rely on a system called accumulation investing.

Create rules first, not emotions.

This might be a way of thinking that applies not only to investing but also to life.

We are all creatures who want to think "I am different."

That is precisely why we should occasionally look into the mirror of numbers and facts to check our standing.

That might be just about right.

Thank you for reading until the end.

My past articles are summarized here.

If you could give me a "like" or follow me,
it will be the strength to write the next one.