5 hours ago
2
Chris Brycki
February 25, 2026 — 5:01am
In early 2021, if you had told investors that Harvey Norman would outperform Amazon over the next five years, you would have been laughed out of the room.
At the time, much of Australia was in lockdown. Offices were empty. Shopping centres were quiet. Everything had moved online. If you said e-commerce would boom, you were right. If you said cloud computing would dominate, you were right.
And if you picked the global leader in both, you probably bought Amazon.
And yet since the start of 2021, Amazon’s share price has lagged old economy retailers such as Walmart and Costco in the US, and even Australia’s own Harvey Norman.
That’s not because Amazon failed. It kept growing. It kept investing. It remained a dominant global business. The problem was not the narrative, the problem was expectations.
By early 2021, Amazon was trading on a valuation that assumed years of uninterrupted high growth. Investors were not just paying for strong earnings, they were paying for perfection.
Returns don’t come from owning the best companies. They come from owning ones where the gap between perception and reality moves in your favour.
Investing is not about predicting what will happen. It’s about understanding what the market already expects to happen, and then asking whether reality will be better or worse than those expectations.
In 2021, everyone believed e-commerce and cloud would dominate. That belief was not an edge, it was consensus and the price already reflected it. When perfection is priced in, even good results can disappoint. The lesson is uncomfortable for investors.
Returns don’t come from owning the best companies. They come from owning companies where the gap between perception and reality moves in your favour.
If a company is universally loved, heavily owned and priced for perfection, the hurdle is high. It needs to deliver not just strong results, but results that exceed already lofty expectations.
If a company is underestimated and priced conservatively, the hurdle is lower. It can surprise on the upside even with modest improvements. That’s why beating the market by picking shares is so hard.
To outperform consistently, you need to understand what is already priced in. You must identify where expectations are too optimistic or too pessimistic, and you must be right when the crowd is wrong. That’s an extraordinarily high bar.
Professional fund managers devote their careers to this task. They have research teams, models and access to company management. Yet decades of evidence indicate that most fail to outperform the market after fees over the long term.
It’s not because they lack intelligence, it is because markets are competitive. Every opinion has a buyer and a seller and prices adjust quickly. Obvious trends get priced in fast and by the time something feels certain, it usually is.
For everyday investors, trying to outguess the market often leads to concentrated portfolios and emotional decisions. Chasing what has worked. Selling what has disappointed. Paying high prices for popular stories. But there is a simpler approach.
Instead of trying to predict which stock will exceed expectations, you can own the entire market.
An indexed ETF doesn’t rely on you being smarter than everyone else. It accepts that markets are broadly efficient most of the time. It gives you exposure to thousands of companies across different sectors and countries.
You benefit from overall economic growth, and you capture the winners as they emerge. You avoid the risk of being heavily exposed to a single narrative that is already priced for perfection.
Over time, broad diversification and low costs compound quietly. You don’t need to be smarter than the market to build wealth. You simply need to participate in it consistently and at a low cost.
Beating the market requires you to be both contrarian and correct, again and again. For most investors, recognising how hard it is to outguess the market may be the most valuable investment lesson of all.
Chris Brycki is the founder and CEO of online investment adviser Stockspot.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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