Search for that edge

"Discouraging as this state of affairs may be to a prospective speculator, I think that one can progress only by confronting it squarely and thinking about its implications. The No Free Lunch principle is telling us that success in speculation must rest on personal traits, on abilities outside the reach of the majority of investors. It must also rest upon some arcane understanding of market behavior and of the behavior of investors and other speculators. Lewis and Short define the Latin adjectivearcanusto mean a thing that is hidden, concealed, secret, or private. To beat the market, one must develop and exploit a kind of skill that is inaccessible to most people. To discover the nature of this skill, we must turn our gaze inward. We must focus on human nature and the social relations that are the warp and woof of the world in which we live. It is here in the speculator’s relationship to crowds, in his ability to identify them, and in his ability to stand apart and act differently from them that his edge may be found."

Search for that edge