It’s this: You, as an individual investor, have many advantages over the professionals.

You may be worried about inflation, tariffs, geopolitics, artificial intelligence or war. You have concerns about the size and safety of your portfolio. You might be thinking, If only I had access to the inside info and exotic alternative investments the big guys do.

Well, I’m here to tell you that the pros have it much worse than you do. That’s the only secret you need to know.

Here’s my list of the things you have going for you, along with how you can put them to best use.

In 2001, when Charles Ellis was head of the investor committee for Yale University’s endowment, he said this:

“Watch a pro football game and it’s obvious the guys on the field are far faster, stronger and more willing to bear and inflict pain than you are. Surely you would say, ‘I don’t want to play against those guys!’ Well, 90 percent of stock market volume is [traded] by institutions, and half of that is done by the world’s 50 largest investment firms, deeply committed, vastly well prepared—the smartest SOBs in the world, working their tails off all day long. You know what? I don’t want to play against those guys either.”

The investing pros have the tools, the manpower, the capital, political connections, inside information—everything goes their way. They have the home field advantage. If you try to compete against them, in their stadium, on their turf, playing their game by their rules, the outcome will be what they want: You and your portfolio’s losses are their gains.

USE YOUR ADVANTAGE: Here are three things you can do that the pros cannot:

First, you can avoid the stock picking mania. Television shows covering Wall Street love to tout the trend that is suddenly in vogue. They trot out the manager who has been killing it this month. But they rarely focus on the long-term track record. The simple truth is, different investment styles and sectors come in and out of favor all the time. The fund crushing it this quarter was very likely underperforming by similar amounts in prior quarters. The academic research is overwhelming: Less than half of all active managers beat a basic index each year; over five years, it’s 20 percent who do. Over 10-year periods, it’s 10 percent, and over 20 years, it’s practically no one.

The second thing you can do is manage the noise. You are a long-term investor, and therefore you do not need to follow every twist and turn of the news. Moderate your daily media intake to reasonable levels. What happens in the markets on any random Tuesday is not relevant to someone who won’t be drawing down on their portfolio for five, 10 or 20 years.

Third, you can simply index: Your core portfolio should be a low-cost index fund from firms such as Vanguard, Schwab or BlackRock. If you want to set up a cowboy account to play around with, limit that to 5 or 10 percent of your liquid net worth. Once that money is gone, you are done playing around.

Everyone who manages money for other people is measured against a benchmark. It doesn’t matter if you run a portfolio of stocks, bonds, commodities or crypto. There is an official index against which everything you do—your buys and sells, even the trades you didn’t do—is judged and compared.

If you run a large-cap stock portfolio, then your measuring stick is the S&P 500. Small caps? The Russell 2000. Emerging market equities? MSCI EAFE Market Index. Bonds? Bloomberg U.S. Aggregate Bond Index. The list goes on and on. Each is updated in real time, so managers literally see how they are performing—or, more likely, underperforming—second by second.

You, the individual? You have no benchmark to meet or beat on a quarterly or annual basis. Unlike the pros, you get to set your own metrics for assessing how well you are doing. You get to measure your success by seeing if you are on track to achieve your goals.

USE YOUR ADVANTAGE: Figure out your goals. Are you saving for retirement, perhaps 10 or 15 years from now? Or, if you’re in an early stage of retirement, are you making sure you don’t take unnecessary risk and blow what you’ve saved? Investing for the next generation or two? Philanthropic causes?

Once you set your goals, you can create a portfolio that is balanced, appropriate and most likely to get you where you need to be. Then you can track whether you are on target—your personal benchmark, not someone else’s.

Professional investors managing billions of dollars have a huge headache when they buy or sell securities. They have to deal with the likelihood that their trades will affect the markets. Buying a million shares of just about any stock causes its price to rise, making the pros pay more for buys (or get paid less for their sells).

You, on the other hand, don’t have to worry about having an impact on prices. If you decide you want to own a stock or an exchange-traded fund (ETF) or a mutual fund, you just buy it. Your 1,000 or so shares won’t cause prices to move in either direction.

And, since you’re not a professional, you don’t have to spend a lot of time thinking about how you are going to promote your fund or how you will defend your trades when markets get wobbly. You don’t need a pitch book or a deck or a PowerPoint presentation.

It’s your money! You are responsible only to yourself and your family. You are the CEO and chief investment officer of You, Inc.

Having no one else to answer to allows you to avoid the short-termism and other performance-damaging behavior that pros in the spotlight are prone to. You can skip the quarterly conference calls with angry investors and ignore the withering media glare and cruel criticisms from your peers at other funds.

USE YOUR ADVANTAGE: Once you’ve set your goals, you can identify the best portfolio allocation for your needs—the mix of stocks, bonds and cash that will get you to where you want to be, as opposed to the portfolio someone else would like. A key element of focusing on your own goals and ignoring other people’s opinions is making sure you are taking an appropriate level of risk, which gives you the highest probability of achieving your goals with the least amount of worry and stress. I am surprised by how often risk is misaligned with people’s needs. Some households with plenty of assets take way too much risk—they do not need to own a very aggressive portfolio to hit all their targets. Others don’t take enough risk, carrying too much cash and too few stocks to achieve their long-term objectives.

Here are some things big-time money managers have to spend money on that you don’t: flying around the world to meet prospective clients; schmoozing at pricey conferences; renting an expensive office—spectacular views required—filled with modern furniture and high-end art; building an impressive research department and hiring legal and compliance personnel; setting up a multinational accounting team to deal with global tax headaches.

No wonder so many clients pay so much for the privilege of underperforming: Alternative investments like hedge funds, private equity and venture capital commonly charge 2 percent of assets under management, plus 20 percent of gains. This makes fund managers wealthy—not their clients.

You, however, can get by with hardly any investment expenses. You can buy stocks for free today. If you buy an index mutual fund or ETF, you can pay as little as 0.05 percent of your investment per year in expenses—that’s 50 cents for every $1,000. Your cost structure, fees and even taxes, to some extent, are within your control.

Keeping your costs low over the decades can add 20 to 30 percent to portfolio gains over longer time horizons.

USE YOUR ADVANTAGE: The benefit of owning lower-cost investments compounds over time. Investment vehicles like hedge funds, private equity partnerships and venture capital firms aren’t worth putting your money into, except for the top 10 percent of them. And those outperformers typically won’t take you on as a client unless you have hundreds of millions of dollars to spare. I warn people who put money in these alternatives, “Come for the high fees, stay for the underperformance.”

On average, the S&P 500 index falls 5 percent once or twice a year; it drops 10 percent just about every year. Full 20 percent drawdowns occur about every three or four years.

When the last big slide occurred, in early 2025, the pros pulled their hair out, missed the initial drop and/or weren’t positioned to take advantage of the recovery. And that happens every time the market moves more than a few percentage points in either direction.

You don’t have to worry about every zig and zag, because you are able to think long term—by which I mean five to 10 years or more. Even if you’re already retired, you can have a much, much longer time horizon than professionals do. The stock market’s movement over a day, week, month or even calendar quarter doesn’t matter to you. A quarter to you is merely one-fourth of the year, not a measuring stick that will soon lead to your first cardiac event.

On average, equity markets gain about 10 percent per year (it’s been about 14 percent during the current bull market). At 10 percent annual gains, markets double every seven years. Warren Buffett, the 10th-wealthiest person in the world, has a net worth of about $143 billion. Fully half of that wealth was accumulated only since 2019—seven years ago. That shows the power of compounding.

USE YOUR ADVANTAGE: You can avoid all the short-term games the pros have to play: the stock picking, timing the market—jumping out before a pullback and then back in before the recovery—or chasing the latest trend.

Your strongest advantage is that you get to allow your portfolio to quietly, relentlessly, continuously compound over the years.

Your biggest job is a pretty simple one: to not interfere with the magic of compounding.