Successful investing is all about getting an edge — finding the inside scoop, following every market beat and predicting the next big move — at least that’s what traditional investment books have long argued. But is it true?

In his new book, “How NOT to Invest,” Barry Ritholtz suggests an alternative approach to the markets, one that aims to cut out the noise and offers Main Street investors a different lens through which they can view their investments. 

Ritholtz, co-founder of Ritholtz Wealth Management in New York, has accumulated his fair share of insights into the stock market over 30-plus years of work as a trader, strategist and asset manager. But, in his latest book, readers won’t find much in the way of new investment advice. 

Instead, Ritholtz goes to great lengths to outline what investors shouldn’t do — highlighting the unforced errors and investment missteps that lead regular investors to chronic underperformance in the market.

“The facts are unassailable: It’s not that most investors aren’t great, it’s that they make too many avoidable mistakes,” Ritholtz writes in the introduction to his book. “That is the subtle but crucial secret to your success as an investor. As I have watched my own investing improve over the decades, I attribute that success to being less stupid rather than becoming smarter.”

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Through nearly 400 pages of cautionary tales and critical analysis, Ritholtz paints a mural of the bad ideas, bad numbers and bad behaviors that are sabotaging investors. 

The book was inspired by questions that Ritholtz received from his clients over the years, he said in an interview. 

“I reached out to a publisher who had been speaking with me … and I said, ‘Hey, I don’t know if this is an idea that works, but it seems like every other email I’m responding to from clients is debunking some financial bulls—,'” he said. “‘How do you feel about debunking financial bulls—?'”

The editors, rooted in proper British sensibilities, wouldn’t accept a curse word in the book’s title, but they eventually settled on the title “How NOT to Invest.” The deceptively simple title is a statement of negation from the hoard of investment advice books out there that promise to make the reader rich as long as they follow their unique investment philosophies.

“How NOT to Invest”is likely more appealing to mom-and-pop investors than professional financial advisors, but Ritholtz said the book still holds a couple of key lessons for planners looking to better advise their clients.

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One of the most valuable things an advisor can provide their client is some perspective when the client is allowing emotion to get in the way of financial decisions, Ritholtz said.

Back in April 2020, at the bottom of the COVID-19 market crash, Ritholtz published an article on Bloomberg News that looked to position the current moment in a historical context. 

“You go back through Pearl Harbor, the JFK assassination, the oil embargo, the impeachment of Bill Clinton, the impeachment of Donald Trump. You go through all these things and [you find that] markets wobble and then they go back to doing what they were doing,” he said.

Ritholtz wasn’t trying to call the bottom of the crash (although he happened to publish the article within days of the crash’s peak), he said he just wanted to share what past events may have to say about the current market. But that didn’t stop the hate mail from flying in.

Backlash to Ritholtz’s article included a client at his own firm, who told an advisor there that “Your boss is a f—— idiot,” the advisor later told Ritholtz. The client, about to depart on a trip to Europe, told the advisor that he couldn’t leave Ritholtz in charge of his money.

“When I get back in a month or two, we’ll have a conversation,” the client told the advisor. And from there we know how the story goes. The market rockets back to its bull run, gaining some 18% from its bottom by June before ending the year nearly 50% up from the March bottom.

After returning from his trip, the client called the advisor and said to him, “Alright, so now I just have to tell you, I’m completely wrong. Your boss was completely right.”

Ritholtz has taken a similar approach while advising his clients in the increasingly panicky market that investors are currently navigating.

“The S&P is barely down 10% and the [volatility index] is close to 30. The panic level that’s out there is so substantial. And it’s like, you get two 10% drawdowns every three years or so. This is like a once-in-an-18-month thing,” he said. “Don’t get me wrong, risk levels remain relatively low, but they are definitely higher than before. So we’re aware of this. We just don’t want you to start panicking over all the increased volatility we’re seeing.”

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Alongside mitigating emotions in financial decisions, Ritholtz said that advisors need to help their clients figure out exactly why they’re investing. “Purposeless capital” is a liability to long-term gains, he said.

“I think of Archegos [Capital Management] and Bill Hwang … he was so leveraged and so aggressive, he pyramided up to $20 billion and then blew it up and lost all of it,” Ritholtz said. “When the sole reason you’re investing is to have money make more money, it really isn’t an ideal situation. You really should be investing toward a specific purpose, and that timeline and that purpose will help determine how much risk you should embrace.”

Main Street investors have a lot of disadvantages when it comes to making money in the market, Ritholtz says in his book. But they also have some key advantages, as long as they lean into them.

While big traders have to manage client concerns and day-to-day market movements, mom-and-pop investors can take a step back, strip away the short-sighted emotions that sabotage them and follow a clear plan that will help them achieve their goals. It’s the advisor’s job to help them do it, Ritholtz says.