How do individual stock pickers answer the theories brought up in this thread?
The theories don't always apply. The studies are generally of professional money managers and not small individuals. it's true that most individuals are way worse than professionals, but that doesn't mean that we all are.
Professional money managers have many masters. They are not generally free to just pursue the strategy that they think is best. If they underperform for a quarter, people start pulling out their money. In order to outperform long term you have to be uncorrelated to the rest of the market and they aren't really free to do that.
Most individual investors underperform even the indices by 5-6% per year. Even index fund investors don't generally get the full performance they should out of their investments.
I can only go based on my own experience that I've outperformed on average for 10 years. It doesn't matter that someone says I can't do it because I can and have. And I know plenty of others who have done the same as I.
I don't have the constraint of trying to move large sums into and out of the market.
I'm not judged based on how closely I follow a benchmark
Nobody is going to pull the rug out from under me if I have a bad quarter or year.
I can focus on owning businesses, not "names" or chasing the latest hot thing.
I don't have to window-dress my end of quarter holdings to make sure that my prospectus shows the right names.
I can hold a stock for literally years and years and allow compounding to do its magic and not jump in and out based on the whims of the market.
I don't care about high frequency trading.
I don't pay ANYONE a percentage of my assets, not even Vanguard.
If the average investor underperforms by 5-6% per year, SOMEONE is capturing those dollars. I would like to see if I can do that myself. It's worth the time for me and my own experience tells me it's worth the effort. If I fail it's only on me.