Freakonomics authors and the economists they cite posit that the stock market is essentially a random walk. They argue that if anyone could reliably predict stock movements, that very ability would alter the market, negating the prediction. This creates a paradox where any truly effective predictive method becomes ineffective once known.

The failure of complex predictive models and the poor long-term performance of actively managed funds compared to passive index funds further support this view. Even financial professionals, with all their resources and expertise, consistently fail to outperform the market average over extended periods.

As the person who deeply involved in oil market, I was very interested in predicting of oil prices movements, but came to the conclusion that there are almost 150 factors, some of them adding or removing on everyday bases. Moreover, the weights of these factors are always changing hourly.

However, only one social group is always outperforming the market. The study "Abnormal Returns from the Common Stock Investments of the U.S. Senate" presents a compelling counterpoint. It reveals that stock portfolios of Senators beat the market by an average of 85 basis points per month, or roughly 10% annually. This outperformance persisted over several years, significantly exceeding returns of both the average investor and corporate insiders.

If you want to go into details, you may check the Periodic Transaction Report for each of US Senators (I took Nancy Pelosy) by following this link: https://disclosures-clerk.house.gov/public_disc/financial-pdfs/2023/10059734.pdf

Even more intriguing, Senators' abnormal returns were more pronounced in stocks from their home states and in companies that had contributed to their political campaigns. This suggests that Senators might be leveraging local knowledge and connections to inform their investment decisions.

As we conclude, I invite you to write in the comments on your own approach to the market. Consider these thought-provoking questions:

1. How often do you find yourself attributing your investment successes to skill and your failures to bad luck? Could this be a sign of overconfidence bias affecting your decision-making?
2. When you hear about a "hot stock tip," do you feel an urge to act immediately? How might this impulse relate to the fear of missing out (FOMO) rather than rational analysis?
3. Do you unconsciously give more weight to financial news that confirms your existing beliefs about certain stocks or market trends? How might this confirmation bias be shaping your investment strategy?

By examining these subconscious patterns, we can become more aware of our biases and potentially make more rational, informed investment decisions. After all, in the unpredictable world of stock markets, self-awareness might be our most valuable asset.

Also, if you want to eliminate subconscious mind patterns that lead to the losses on the stock (and crypto) markets, I would recommend you to use this Master's Solution and get my free consultation here: https://calendly.com/7989347/30min

Please note that for the use of MASTER SOLUTION you need to read the following processors “Clap”, “Execute it”, “Merge”, “Hoppo” here