Why do most investors fail?

In Fooled by Randomness: The Hidden Role of Chance in the Markets and Life by Nassim Nicholad Taleb there is an example of the role of chance in the market.

Assume you have 10,000 people who flip a coin once a year. After five years, you will have 313 people who have come up with heads five times in a row. If you put suits on them, sit them in glass offices, and call them a mutual or a hedge fund, they will soon be managing millions. They will absolutely believe they have figured out the secret to investing that all the other losers have discerned. Their seven figure salaries prove it.

The next year, 157 will completely lose everything they made. With my power of analyst, I can predict that at least one of you will be in one of those funds which lose everything!

Make no mistake, at this moment in time..... Analysts Are Useless!

A study conducted from 1982 through to 1997 showed that analyst were, on average, wrong 200 percent of the time in predicting the earnings expectations of companies they selected as worthwhile investments. And these people are employed be the people who put together your investment portfolio.

TRUE: Past performance is not indicative of future results! (So why are CVs asked for by employers?)

And what does an analyst use to predict the future earnings and potential rise in stock price of a company? Yes you have it..............Past Performance!

Start your very own analysis company!

Go to 'First Call' (a division of Thompson Financial that compiles estimates from numerous sources) and look at the consensus estimate. Cut the estimates by 50% and publish your estimate.

Then hire a few financial types to write reports that reflect your "analysis."

RESULT: You will be closer than 90% of ALL analysts. After a couple of years you will be regarded as a genius. You will then be able to sell your analysis to firms all the over the world for mega amounts of money.

The fact: Your analysis will have a better basis in historical fact, than the estimates of those so called analyst who are actually trying.