Every year, millions of investors try to pick winning stocks. They research companies, analyze earnings reports, follow analyst recommendations, and make careful selections for their portfolios.
Most of them lose to the market.
This isn’t a failure of intelligence or effort. It’s a failure of approach. Stock picking assumes you can consistently identify undervalued companies before the market does. The evidence suggests otherwise.
The Stock Picking Problem
Consider the track record of professional fund managers – people with teams of analysts, advanced tools, and decades of experience. According to SPIVA data, roughly 80-90% of actively managed funds underperform their benchmark indexes over 10-year periods.
If professionals struggle with stock picking, what chance do individual investors have?
The problem isn’t information access. Today’s investors have more data than ever before. The problem is that stock picking requires you to be right about too many variables: company fundamentals, market sentiment, timing, valuation multiples, competitive dynamics, and dozens of other factors.
Get one wrong, and your “sure thing” becomes a loss.
What Works Instead
Systematic approaches remove the guesswork. Instead of trying to predict which companies will succeed, systematic methods identify which stocks are already showing strength through measurable criteria.
This is the difference between prediction and observation.
Momentum-based systems, for example, don’t try to forecast earnings or predict market sentiment. They measure what’s actually happening in stock prices and trading patterns, then respond accordingly.
The Brockmann Method applies this principle to the S&P 100 – America’s largest, most established companies. Rather than picking individual winners, it systematically ranks all 100 stocks based on momentum indicators and sorts them into three actionable zones.
Why Systematic Beats Selective
Systematic approaches work because they:
- Remove emotional bias from decisions
- Apply consistent criteria across all selections
- Respond to actual market behavior rather than predictions
- Maintain discipline during both bull and bear markets
- Scale efficiently without requiring infinite research time
Stock picking asks: “Which company will do well?” Systematic investing asks: “Which stocks are already doing well?”
The second question has measurable, objective answers. The first is largely guesswork disguised as analysis.
The Path Forward
This doesn’t mean fundamental analysis is worthless or that company research has no place in investing. It means that systematic frameworks provide better foundations for investment decisions than subjective stock picking.
Tomorrow, we’ll examine how financial media compounds the stock picking problem by creating an illusion of expertise where none exists.