The Way to Beat the Market… Is to Do Less

"Understanding this environment does not mean ordinary investors are helpless. It means they need to play a different game. The millisecond advantage of HFT matters enormously to traders executing thousands of transactions per day. For a long-term investor buying and holding for years, the difference between executing at one price versus a marginally adjusted price is essentially irrelevant. Diversified index investing — buying broad market index funds and holding them for decades — removes almost all the structural disadvantages that retail traders face. You cannot be front-run on a trade you make once a year. The evidence consistently shows that passive, low-cost, long-horizon investing outperforms active trading for the vast majority of retail investors, not despite the rigged microstructure of modern markets, but partly because of it. The more you trade, the more friction you encounter. The less you trade, the less it matters."

Added 2 May 2026