I was going to start out by writing that the paradox of stock market investing is that on the one hand the market takes in just about everyone. On the other almost no active portfolio manager is able to perform better than an index fund. And those who do outperform in one year most times give everything back (and often more) the following year.

That’s not true, though. The securities world is one of the last bastions of corporate anti-woman sentiment and, with the possible exception of economics staffs, has a real anti-intellectual bias as well.

The real paradox is that even in the days when both brokerage firms and investment managers had large staffs of analysts virtually no one beat the market, even before subtracting fees. That continues to be the case today.

Also, even if you spent the time and effort needed to locate an outperforming manager, there’s no guarantee that manager’s hot hand will continue or that the manager won’t be headhunted away or that they’ll get promoted to a higher-paying supervisory job. Then you’ve got to go through the whole process again.

Actually, there’s an obvious way we can do better than professionals …holding index funds. We also gain this way because the fees we’ll pay for services through a discount broker will be at most 10% of what we’d pay an active manager.

Nevertheless, even though few (none?) of us would think we can outshoot Steph Curry, get a hit against Edwin Diaz or block any NFL defensive lineman–and no one I know would try home knee surgery (one of our former neighbors, a software salesman, did elect to defend himself in criminal court, with predictably disastrous results), we all think we can hold our own against professional investors through our own active management.

In a limited sense, we can. Peter Lynch, for example, was an investor in Dunkin’ Donuts (now Dunkin’) during the early days of its national expansion. He learned about it from stopping for coffee on his way to work. A friend who’s a surgeon was always up-to-date on the latest medical research. And he knew from experience in his practice which drugs were effective and which were not. So he had an edge in evaluating drug companies and surgical equipment firms. Also, of course, in today’s world SEC filings for all publicly traded companies are readily available on the EDGAR site.

This brings up another issue. It’s crucial to know enough about financial accounting to be able to interpret the accounting statements.

To sum up: I think a reasonable strategy is to have most of one’s equity allocation in index funds, with one or two high-conviction ideas. These must be stocks where we have a reasonable basis for thinking we know more than the consensus and where we can monitor developments closely.