Just a quick clarification: the DALBAR report you mention isn’t about individual stock-picking investors beating ETF investors. It’s specifically about variable annuity investors — people who invest in mutual-fund-like subaccounts within an insurance wrapper. These aren’t classic DIY investors selecting individual stocks.
What explains their better performance? Behavioral discipline. Variable annuities often come with surrender charges and complex structures, which unintentionally discourage emotional trading. DALBAR found these investors held on longer and traded less — and that alone boosted returns.
So, it’s less a win for stock pickers, and more a case study in how structure can nudge better investing behavior.
That said, I agree it’s worth learning about investing. But for most, a low-cost ETF portfolio with real diversification is still hard to beat — especially if you’re not naturally calm during market dips.