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In the trading of securities, there is a fact that investors fail to fully consider.  The distribution of information is always uniform.  This creates an interesting, counter-intuitive system that forbids the development of expertise.  What I’ll try to explain is the nature of the market’s behavior as it relates to the ability of an individual to predict that behavior.   The efficient market hypothesis tells us that the value of non-financial information is always factored in to the price of a security.  This is achieved by the uniform distribution of information.  No one individual investor is allowed to have information relevant to the price of a security prior to any other individual.  This effectively levels the intellectual playing field with respect to the price of any given security.  The efficient market hypothesis is half right.  If the rate of informational distribution was infinite,  allowing all investors to know everything the instant it was available, then the market would be 100% efficient.

Since we’re all human, we don’t all learn things at the same time.  There will always be an informational lag that gives some individuals a slight advantage.  However, the market is largely efficient, and as technology advances and the speed of knowledge increases, the market will trend toward efficiency.

So, why can’t experts master the market?  The idea of expertise extends from our understanding of learning.  Expertise in terms of learning is a product of analysis and experience.  I’m going to explore those two key concepts (experience, analysis)  and their relation to the efficient market.  I delineate experience and knowledge, as using a keyboard is different form understanding how one works.

First, there is experience.  In conventional practices experience is a benefit, the market is exactly the opposite.  The problem with developing market experience is one of stability.  If I play the same game every day for a year I’ll develop a talent for it, but if I play a different game every day for a year, I’ll be no better with the game on the last day or the first.  Experience comes from consistency the market is not consistent.  As such, experience has no value in securities investing.

Second we come to analysis.  The ability to gather knowledge and facts is common to all people.  There is no secret knowledge in the market, or rather if there were it would give an advantage to an investor to possess that information.  As such, no one can find and information to analyze or apply a system of analysis that anyone else cannot.  Therefore, analysis does not provide an advantage in investing.  If you accept my premise, then you should understand that there is no such thing as an “investing expert”.