Why Smart Investors Underperform (Even With the Right Stocks)

本站添加: 2026-05-18

[00:00:00]A lot of people ask me if I have a perfect formula to outperform the market and the number one thing I tell them is to just minimize the number of mistakes you make. If you do everything you can to avoid stupidity, you increase your chances of outperforming the market of outperforming the market. In this video I want to talk about why smart investors underperform even with the right stocks.

[00:00:27]Maybe this is you watching this video.

[00:00:29]You think that you are doing a good job picking your own stock, doing the due diligence, the right analysis, but you don't have the performance you think you deserve. And if you don't know what you don't know, you are stuck. So, in this video I want to talk about a few points here that I think will be pretty helpful to my audience. In case this is your first video from this channel, welcome.

[00:00:53]My name is Kristou Nour. I've been investing in the stock market for almost a decade now and I have achieved a performance of 25% per year. And the goal with this YouTube channel is to help you become a better investor. So, the first point I want to talk about is the overtrading and the emotions. We are all humans, but we are not the same.

[00:01:16]The number one thing that is the most important thing in investing, Warren Buffett says it's temperament. Some people are born with a rational temperament. Some other people are born with a lot of emotions.

[00:01:30]Which camp are you in? And a lot of people that react with emotions, emotional people, are more of I would say eager to overtrade and react because there is a lot of news. And now we are living in the world with too much information, too much noise, too much drama with Trump and the tariffs and the interest rates with the Fed etc. etc. You are really tempted to react, to sell your stocks too late, to buy with FOMO, fear of missing out. And just this first element is maybe the reason why you are underperforming the market. This is I mean, I've seen this many times over.

[00:02:13]Very smart people, very high IQ, but they don't control their emotions.

[00:02:18]Their emotions control them and this is very bad to be invested like this. So, investing is not for everybody, right?

[00:02:26]If you know that you are too emotional, you can just quit uh investing. Quit rational investing because maybe this is not for you.

[00:02:34]But this channel is here to help rational people outperform the market.

[00:02:40]If you know you are in this category and you can think logically without having a lot of emotions when you see red in the market, red days that will happen a lot, you have VIX spiking, if you can keep your calm, this is great.

[00:02:55]And some people are born with it. You can work work it out a little bit to improve your temperament, to be more calm, to reduce your anxiety. I've helped clients that were in the emotional camp and we have created frameworks so that now they can have a checklist, step one, step two, step three, step four, step five to have more logical structure for their analysis, right? So, sometimes investing is this easy. You can just avoid reacting to anything. And I'm telling you, every day on Twitter you will have things to react. You can react on anything right now. Everything is a drama. You can open Twitter, X, YouTube, Instagram, anything can work.

[00:03:39]You have too much information right now.

[00:03:41]How do you know if your information is correct or not? How do you know if an information is important or not? Because not everything is correct and not everything is important. And if you react too rapidly, emotionally, it will be bad. It will be bad. So, it's all about stay inside your circle of competence, knowing what you own, being confident in your picks. If you have conviction, you can hold through the volatility. Okay? And you will avoid overtrading because every time you trade, you sell or you buy, you have to pay a transaction fee to your broker.

[00:04:14]The fewer trades you have, the fewer the transaction costs, the more you will decrease your crush transaction costs, sorry, if you reduce the volatility and you just buy and hold. This is what I preach to all my clients and this is what I've been doing for almost a decade. You can just buy good companies, wonderful companies at a fair price and you hold and you don't need to overtrade. I see too many people having 200 stocks in their portfolio with minimal conviction, so they trade stocks. They are not investing, they are trading. They are gamblers. They are just lying to themselves. If you really want to be an investor, you have to stop overtrading and reacting emotionally because you have a lot of conviction in your pick. This is how you can pick winners and outperform the market. The second point is smart investors, some smart investors have no written investing process. They just operate with vibes. And this is in relation with the first point, obviously.

[00:05:18]If you have If you don't have a written principle framework, it means you are going blind. You are investing blindly. If you don't know your performance, if you don't track your performance, if you don't track your decisions, if you are not journaling, uh maybe you are just investing with vibes and you don't know what you are doing.

[00:05:41]And this is pretty bad because you will forget the mistakes you have made in the past. So, you can just repeat the mistakes. The goal of having investing The goal of having an investing process is to not repeat the same mistake twice.

[00:05:57]How many times do you want to have the same mistake and say, "Oh, I'm so dumb.

[00:06:01]I should have avoided this. I knew this." And you just keep repeating the same mistake. So, investing with vibes is very bad when it comes to outperform the market and investing in general. If you look at the best investors of the world, Peter Lynch, Monish Pabrai, Guy Spier, Charlie Munger, Warren Buffett, they just had a very simple framework and they were just reacting logically to the events. Very niche areas and it worked beautifully. So, my goal is to just copy the best because so far it has worked. By the way, if you want to become a better investor and improve your performance, I have a coaching program. It gives you the exact method I've used to generate 25% per year for almost a decade. More on that at the end of the video. Next point, they can't tell if a stock is undervalued or just cheap.

[00:06:56]I want to talk about multiples here.

[00:06:59]Sometimes uh I receive comments on YouTube saying, "What do you think about this stock?

[00:07:04]It's cheap." And then I check the financials, look good, and I check the P/E ratio and the P/E ratio dropped, but it dropped from a very high level. If a stock is extremely overvalued and it drops a little bit like 20%, it has not become cheap. It has become slightly uh less overvalued, but it is still overvalued.

[00:07:27]It's not because a stock price drops that it has become overvalued. Okay? Um sometimes you have expensive stocks. I'm thinking of TPL or Fair Isaac. Sometimes they shoot to the stars. So, the valuation go up immensely and you have an anchor bias in your mind saying, "Yeah, they deserve a higher multiple because of this and this and this." Fair enough. If the stock drops 50%, get that gets cut in half, it's not cheap. It goes back to fair value. And you will have people that will say, "Oh, it's very cheap right now. The stock is undervalued. It has dropped 50%, so it must be good value here." Not at all.

[00:08:10]It was just that the stock was extremely overpriced and now it is going back, reversion to the mean.

[00:08:16]It's going back to fair value. It's not cheap. Same thing, you have other industries like the car makers, for example, the auto industries where everything is cheap.

[00:08:27]You have a P/E ratios of four, five, six. So, you can say, "Yeah, it's pretty cheap." But it's cheap for a reason.

[00:08:35]It's cheap because the earnings are volatile. It's cheap because the earnings are unstable, uncertain. You will have a lot of risks when it comes to competitors, China, tariffs. People have a discount for these car makers for good reasons.

[00:08:54]If you look at the history, they are not good capital allocators. If you look at history, they don't have huge margins.

[00:09:01]If you look at history, the management team is not that competent to uh to reward shareholders. So, it's normal sometimes to have a discount. So, you may look at any car maker in the world and say, "Oh, it's a cheap. It's a value value investing play. It's so easy." No, it's cheap for a reason.

[00:09:19]And the goal of investing is to differentiate when a stock is cheap for a reason because it's a bad company in a bad industry and other stocks that are dropping at are now becoming cheap.

[00:09:32]This is what we buy.

[00:09:33]If you don't know how to differentiate these two businesses, a mediocre bad business and an excellent wonderful business that has become cheap, well, you are wasting your time. And this is also why you need a process, a framework, something I work a lot with my clients how to do. How to differentiate from a bad opportunity uh from a good opportunity.

[00:09:58]You know, this is very different and only this is the reason why I have made 25% per year for the past decade.

[00:10:06]Next point.

[00:10:08]They get shaken out during dips, no conviction. How many times have you seen this? You see the markets dropping, the thumbnails on YouTube are red, you have scary faces on the thumbnails, so people are in complete panic mode and you say, "Oh, maybe this time is different. Maybe this time is the the bad one. Maybe this time is the big one. So, let me sell or trim my positions a little bit and I will get back higher. I will buy uh later. When things have dropped, I will buy again."

[00:10:42]You know what happens most of the time?

[00:10:45]People sell and then stocks drop and drop and drop and people are becoming greedy, so they wait and wait and wait and then stocks rebound and these same people end up buying higher.

[00:10:58]Okay? So, you get shaken out during dips and with Trump as a president, you will have dips. Not a lot of people watching YouTube right now have lived in uh and invested through the first mandate uh and in with Trump between 2016 and 2020. I was there and I saw all the headlines. I saw all the YouTube channels uh the red thumbnails. I saw the panic. I saw the comment section. I remember very well the mindset people had.

[00:11:33]Panic selling in 2018, panic selling in 2025. It will happen again and you have to be ready. This is also why you need a framework. If you don't have a structure, you if you don't have a plan, you are going blind. You are investing blindly and this is not good. You see all these points that are yeah, I'm talking about accumulate and they all come to the same conclusion. If you don't know what you're doing, just investing for fun, you deserve to underperform. You deserve to have the mediocre performance you have. This is it. If you have conviction in your picks, you will outperform the market. You will know what you're doing.

[00:12:13]And the last point, they confuse diversification with strategy. Sometimes people call me, you can call book a call with me uh to join my coaching program by the way. It's the first link in the description to know more about my program. Sometimes people call me and they have 200 stocks in my portfolio. Oh yeah, 200 stocks uh uh and I ask this simple question, do you know very well these 200 stocks? Do you have the time to monitor these 200 stocks? Are you so smart so you can invest in many industries at the same time? And I say, "No, I literally don't have the time to monitor everything. I'm just I just checked a YouTube video talking about this company, so I am invested."

[00:12:52]But that's it.

[00:12:53]Okay?

[00:12:54]How was the performance? And almost more than 90% of the times they were struggling because they have too much diversification in their portfolio. They don't know why they own a stock. They don't have the conviction and they don't spot the red flags before the stocks drop. So, of course, sometimes you deserve the mediocre performance you have. If you diversify too much, that is a risk. Warren Buffett said, "Diversification is uh I would say uh the conclusion of ignorance." Let me change a little bit of the quote. If you are ignorant and you don't know what you're doing, you can diversify. But if you are diversifying too much, you will have the same performance as the S&P 500 because you are the S&P 500. How many investment funds do you know that are buying a basket of stocks? And this is always the same basket. Nvidia, Google, Apple, Amazon. I mean, they are buying the index, so they deserve to have the same performance as the index. If you don't differentiate yourself with the market, you will be the market. So, this is not a strategy. Diversifying too much with too many stocks, it's actually a risk if you want to compound your wealth in the future. If you like this content and you want to go deeper, I have a coaching program. In this program, you will learn the strategy I use to outperform the market. You will learn how to find winning opportunities. You will learn how to properly value stocks, when to buy, when to sell so that you can build a strong portfolio with great companies. Additionally, inside the program, you will have access to an exclusive community of like-minded investors and you will also have access to my personalized guidance to reach your investing goals. Click the first link in the description to get more information. You will get a video, a short video that explains how everything works completely for free. No need for your email address, just click the first link in the description and I'll see you on the other side.