Mike Piper is a CPA, author of several books on Social Security, and blogs at The Oblivious Investor. It’s a fantastic blog and I never miss an article.

He wrote an amazing analogy as to why investing profitably in individual stocks is so hard. I wont reproduce the entire article here due to copyright, but the whole post is a 90 second read, and a salient portion is below.

He imagines you and a friend going to an antique fair, where you are looking to buy an undervalued item in hopes of selling it again later on eBay for a profit. You want to get there early so you can find that special and profitable deal, before everything is already picked over . . .

. . . You arrive at the market as soon as it opens, Saturday morning.

But you promptly learn that your friend misread the advertisement. The show opened yesterday. Thousands of shoppers — including many experienced antique bargain hunters — have already been through, picking over all the items.

In fact you learn from another shopper that many of the vendors themselves shopped around at other booths, buying items they thought were underpriced, and then putting them back up for sale at their own booths, at higher prices that they considered more appropriate.

How optimistic are you at this point that you’re likely to find a bargain worth buying?

Not very, probably.

That’s the stock market. Except . . . Article continues –>