“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
— Opening quote, The Big Short (2015)
Since 2007, I’ve helped hundreds of people invest to build wealth. In that time, I’ve noticed a pattern: most investors don’t fail because they lack intelligence. They fail because they’re focused on the wrong things.
Here are three lies I see derail investors over and over.
Misconception #1: You Have to Be Smart
One of the most important investing books ever written has nothing to do with picking stocks.
Winning the Loser’s Game by Charles Ellis is required reading for anyone who invests money. Ellis sat on Yale’s endowment board alongside David Swensen — the man who grew Yale’s endowment from $1 billion to $42 billion over 35 years. He’s a legend but the book’s key point is dead simple:
Investing is a loser’s game. You don’t win with brilliant moves. You win by not messing up.
Ellis compares it to tennis. Only the top 1% of players have the skill to make fancy shots. For everyone else, keeping the ball in bounds and waiting for your opponent to miss is the winning strategy. Investing is the same.
You don’t need a Harvard degree, an opinion on crypto, or the ability to predict the next recession to build real wealth. But selling at the bottom, failing to diversify, getting swept up in speculation — those mistakes can permanently set you back.
You wouldn’t try to play basketball with Michael Jordan, would you? Or tennis with Serena Williams? Why would you try to beat pro investors who do nothing but analyze stocks all day, every day?
The strategy that actually works: Buy low-cost index funds, hold them for years, and avoid reacting emotionally to market swings. Let compound interest do the heavy lifting. That’s it.
Misconception #2: You Need to “Beat the Market”
Maybe the biggest lie in investing.
From 1928 through 2025, the S&P 500 index — a passive investment in U.S. stocks — returned roughly 10% per year on average, handily beating inflation, cash, and gold. $100 invested in 1928 grew to over $1,157,000 by the end of 2025.
You don’t need to be brilliant. You need time to let compounding work for you.
Chart uses a logarithmic scale so all asset classes are visible. A linear scale would make every line except stocks appear flat.
Source: Aswath Damodaran, NYU Stern School of Business — Historical Returns on Stocks, Bonds and Bills: 1928–2025, updated January 2026. pages.stern.nyu.edu. Inflation calculated from U.S. Bureau of Labor Statistics CPI-U historical data.pages.stern.nyu
| Asset Class | Final Value |
|---|---|
| 📈 S&P 500 (Stocks) | $1,157,599 |
| 🥇 Gold | $21,025 |
| 🏛️ Bonds (10-yr Treasury) | $7,753 |
| 🏠 Real Estate | $5,626 |
| 💵 Cash (3-mo T-Bill) | $2,578 |
| 📊 Inflation (CPI) | $1,865 |
Over the decade ending March 2026:
- IVV (iShares S&P 500 ETF): 14.8% average annual return
- ACWI (iShares Global Stock Market ETF): 11.9% average annual return
For most of the decade from 2015 to 2021, inflation ran between 1–2% and the average savings account paid 0.06%. Essentially zero. Even after the Fed’s rate hikes pushed savings rates higher in 2023 and 2024, the national average savings account still pays less than 0.5% today.
Owning a passive index fund beat inflation by 8–10% per year. Consistently. With no research, no trading, no stress.
Professional investors try to find stocks the market has mispriced. Some succeed. Most don’t. And their fees eat the returns of those who do. The honest question isn’t “can I beat the market?” It’s “do I even need to?” For most people building toward retirement, the answer is no.
Take what the market gives. It’s more than enough.
Misconception #3: Investing in New Technology Has the Highest Returns
Tech is cool. It makes our lives easier and lets us do things our grandparents would think of as magic. Recently seven tech stocks have driven most of the growth of the U.S. stock market. They seem unstoppable — growing earnings even when we were all locked in our homes hiding from COVID.
But you don’t get extra points for fancy in investing.
Do you know what the best-performing stock of the 21st century is? Monster Beverage. $1,000 invested at the start of 2000 grew to $1,551,030 by 2025 — a 155,000% return. That beats Apple (91,686%) and Nvidia (126,100%) over the same period. Sugary drinks in cool-looking cans.
And it’s not just Monster. Look at the S&P 500 sector returns from 2021 and 2022:
Three of the last five years, the boring pipes-and-wells business beat the companies building the future. In 2022, tech investors lost more than a quarter of their money while energy investors nearly doubled theirs.
As for the Magnificent Seven — the “unstoppable” group driving today’s headlines — most of them are down double digits from recent highs. Markets have a long history of humbling the stocks everyone agrees are can’t-miss.
Sometimes innovative tech companies produce spectacular returns. Sometimes unloved, boring industries quietly compound wealth for decades. Either way, the money spends the same.
Chasing the most exciting story in the market is usually a losing strategy. The unsexy, diversified approach wins over time.
| Year | Best Sector | Return | Tech Return |
|---|---|---|---|
| 2021 | Energy | +54.6% | +34.5% |
| 2022 | Energy | +65.7% | -28.2% |
| 2026 YTD | Energy | +38.3% | -9.1% |
Three of the last five years, the boring pipes-and-wells business beat the companies building the future. In 2022, tech investors lost more than a quarter of their money while energy investors nearly doubled theirs.
As for the “Magnificent Seven” unstoppable tech stocks driving today’s headlines — most of them are down double digits from recent highs. Markets have a long history of humbling the stocks everyone agrees can’t-miss.
Sometimes innovative tech companies produce spectacular returns. Sometimes unloved, boring industries quietly compound wealth for decades. Either way, the money spends the same.
Chasing the most exciting story in the market is far from a sure thing. The unsexy, diversified approach lets your portfolio endure when market leadership changes.
Notice a Theme?
All three of these make investing feel harder and more exciting than it needs to be. That’s not an accident. Complexity is profitable — for mutual fund companies selling active strategies and brokerage firms who profit on trading fees. But not for everyday investors liket you and me.
The investors I’ve worked with who build real wealth aren’t the ones chasing the latest market craze. They have a clear plan, a portfolio they understand, and the discipline to stay put when markets get scary. That’s the whole game.
Originally published October 18, 2025. Expanded and updated with current market data and charts on April 9, 2026.
Ready to Build a Plan That Works?
If retirement is on your radar in the next decade and you want a second opinion on whether your investments are set up to get you there — let’s talk. My first conversation is always free, and I’ll give you an honest assessment, not a sales pitch.
Want to go deeper?
- The Time Value of Money — why time in the market matters more than timing the market
- More Misconceptions That Prevent Investment Success — three more mistakes that derail investors
