And the club is not alone. Thousands of private investors managed to beat not only the stock market, but also the professionals. So smaller investors have proved they can beat the professionals, even when markets are none too favourable. Professional investors clearly have the upper hand when it comes to the resources at their disposal. But while smaller investors might not have the advantages of being part of a large institution, they do not have the downsides either.
Fund managers are far more restricted in terms of how they invest.
A fund manager can't exactly shoot the lights out - he is very aware that the investors are after a collective investment with little risk and low volatility. Fund managers' benchmarks are increasingly set in ways which give them little choice but to cling closely to stock market indices, making meaningful active management near impossible. Private investors, however, can be more flexible, adopt a more specialist approach and take higher risks. While fund managers suffer from following the herd, private investors can go out on a limb when they spot what they think looks like a great opportunity. Private investors, by contrast, can seek out the tiddlers in the market, research them thoroughly and hopefully spot those that will become the stars of tomorrow.