We often talk about respecting the laws of the market—but what exactly are we respecting?

1️⃣ God dislikes those who are smarter than Him.
Similarly, the market dislikes those who are overconfident, and it will keep wealth away from those who think they are too clever.

2️⃣ The market is a large system.
Most people cannot outperform the market over the long term because most attempts at market timing miss key rallies; most overconfidence turns into transaction costs; most short-term success cannot prove long-term ability.

3️⃣ Active investment returns are extremely low.
Theoretically, the total returns of all active investors combined cannot exceed the market index; in practice, after deducting transaction costs, active investment returns are even lower.
There's a very clear example from Mr. Wu Jun's explanation:
Assume the market's overall annual return is 7.2% (which is indeed the average return of U.S. stocks over the past 30 years).
Half of the investors are passive investors who buy index funds and do nothing. Then their overall return is essentially the market average: 7.2%.
The other half are active investors, including fund managers, institutions, and retail investors. They study companies daily, judge macro conditions, analyze charts, trade, and try to buy low and sell high.
But the problem is: if the total market return is 7.2%, and passive investors have already taken 7.2%, then the group of active investors as a whole can only get 7.2% as well.
It is impossible for all active investors to beat the market.
Because the part you earn extra must come from the part another active investor earns less or loses.
So active investment is essentially not "everyone beating the market together," but rather:
A group of people competing with each other, and the whole group still returns to the market average.
If you also factor in transaction fees, stamp duties, management fees, research costs, time costs, emotional costs, and the costs of mistakes from frequent trading.
Speaking of institutions, in 2025, among large-cap U.S. active funds, 79% of large-cap active funds underperformed the S&P 500; extending to 10 years, the proportion of U.S. large-cap active funds underperforming the S&P 500 is close to 90%.
Don’t always think you are very capable or lucky. Instead, humble yourself to the dust and think carefully.
Our opponent is not the market itself, but: the smartest group of people in the entire market, our own transaction costs, our own emotions, and the self that always thinks "I know better than others."