The Industry’s Playbook: It All Starts with a Thesis
Every day, we’re told a new market thesis.
Turn on financial news, scroll through Reddit, or listen to an asset manager’s pitch, and you’ll hear the same themes:
A major shift is coming.
The market is mispricing something.
This is our “edge.”
Here’s how you can profit.
This isn’t random—it’s how the industry works. Every investor follows the same playbook:
Form a view, validate it, and build a market thesis.
Be right consistently over time.
Profit.
It sounds logical. And, to be fair, some investors do find an edge—at least for a while.
But here’s what’s often left out: Every failed investor had a thesis—often a brilliant, well-reasoned one.
A Thesis That Feels Smart Doesn’t Mean It’s Right
Step 1 is where investors craft their grand narrative. Maybe it’s about rising interest rates, demographic shifts, or the looming collapse of some overvalued sector.
Whatever it is, it sounds convincing.
And that’s the seductive part—a good thesis makes you feel smart. It’s packed with macro insights, historical references, and valuation models. You might even start believing that the market needs you to set it straight. It gives you an illusion of control.
But the market isn’t grading essays. It doesn’t care how well-reasoned your logic is.
For every market participant that thinks they have cracked the code, there’s a pension fund blindly rebalancing, a central bank moving the goalposts, and a teenager on Robinhood YOLO’ing his savings into meme stocks.
You build a thesis, thinking you're competing with other smart investors, and you are. But you’re also competing with every force that moves markets—rational or not.
Being “Right” Doesn’t Mean You’ll Win
Step 2 is where things start to fall apart. Because being “right” in markets doesn’t mean what people think it does.
Every trade has a buyer and a seller. If you believe a stock is undervalued, someone else believes it’s priced correctly—or even overvalued.
And even if you’re right? Timing, sentiment, and randomness can still crush you.
Think about the investors who saw the 2008 housing bubble coming—but shorted too early and didn’t last long enough for their thesis to play out.
The market doesn’t wait for you to be right. It can stay irrational longer than you can stay solvent.
And that’s the real challenge:
You don’t just have to be right. You have to be more right than everyone else.
You have to be right at the right time.
You have to be right consistently, over time, after costs, and adjusted for risk.
Statistically? That’s a losing game for almost everyone.
Profit? Not So Fast.
Step 3 should be the fun part—profit. If your thesis outperforms for a while, it’s tempting to think it’s because of skill.
Maybe you saw something others didn’t. Maybe you do have an edge.
But even if that’s true, the market is constantly arbitraging away inefficiencies.
Time and again, we see the same pattern:
A small fraction of investors outperform the market.
Even fewer do so consistently.
And the ones who do? Their success often fades.
The problem isn’t just that market-beating winners are rare. It’s that you can’t identify them ahead of time. Everyone hears about the winners and the brilliant calls. But the vast graveyard of losers? That rarely gets mentioned.
The Market Doesn’t Care About Your Narrative
Your thesis isn’t just a prediction—it’s a bet. And it’s up against:
Hedge funds with AI-driven models, reacting before you even finish your research.
Institutional investors with direct access to policymakers.
High-frequency traders arbitraging at light speed.
And your neighbor investing in GameStop because “it’s a movement”.
The market is a battlefield of capital; an aggregation of trillions of dollars, adjusting in real time.
Even if you happen to be right? It still has to translate into an actual, tradable edge. One that outpaces costs, risk, and the randomness of market movements.
What If You’re Wrong?
If you take one thing from this piece, make it this. Every investor plans for being right. Too few plan for being wrong.
Having an opinion on markets is easy. Building a portfolio that can survive being wrong is much harder. History is full of investment ideas that seemed bulletproof that fizzled out.
Energy dominance.
Japan’s unstoppable economy.
The idea that home prices never go down.
A thesis can be well-reasoned, widely accepted, and still completely wrong in hindsight. In investing, being wrong for too long is just as bad as never being right.
So ask yourself:
If your thesis is wrong, can you still meet your goals?
Does your portfolio protect against major outliers that could derail your financial future?
If the answer is no, the problem isn’t the market. It’s your approach.
The Smarter Alternative: Plan, Don’t Predict
The real goal isn’t to be the next great market forecaster. It’s to build a portfolio that thrives no matter what happens.
Diversify intelligently, not based on hunches.
Reduce the impact of large errors, rather than chase small inefficiencies.
Accept that the future is unknowable, and structure your investments accordingly.
At the end of the day, markets can reward conviction—but they’re just as quick to punish it. A solid plan is what keeps you standing.
You don’t have to play a game that’s stacked against you. Instead, focus on what you can control.
Bonus Companion Article: When Investment Narratives Fail: Why Diversification Wins
About the Author
Carson McLean, CFP®, is the founder of Altruist Wealth Management, a flat-fee, fiduciary financial planning firm. With over 15 years of industry experience—including time at Dimensional Fund Advisors—Carson specializes in evidence-based investing, tax-efficient wealth strategies, and helping clients optimize their financial lives without falling for market myths. He believes in transparent pricing, data-driven decision-making, and building portfolios that don’t rely on outguessing the market.
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Disclosure:
This content is for informational purposes only and does not constitute personalized financial, investment, or tax advice. Investing involves risk, including the potential loss of principal. No investment strategy guarantees success, and past performance is not indicative of future results. Consider your own financial situation and objectives before making investment decisions.