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Actually because of the wide ranges of indexes I initially responded your comparison was pretty much meaningless. Then to find out you were using a 3x leveraged product makes your attenuated comparison even worse
i agreed that it was limited and limited was all i really intended to give in that initial post. like i said, "i use index funds vs individual stocks and this is my return." that is really all i intended to say and didnt expect anyone to be able to draw many conclusions from it except for "hey captainnj uses index funds and he is happy with his return vs picking individual stocks." i dont think using certain types of funds like leveraged, bond, commodity, etc. makes it worse, it just makes it similarly limited.
of course, if anyone wanted to expand the discussion i was welcome to do so and i did. i am not really sure why you take such a big issue with the post or why you expected it to be so comprehensive. it was only about 2 sentences, nobody could have assumed that i was trying to give a comprehensive review of the investments.
Ya know, those who claim people should be investing in individual stocks (obviously not so many people on this thread) fail to take into consideration some basic truths.
Lots of people (like me) are not very good at picking stocks, don't know the right things to look for, don't understand technical analysis of stocks or the other types of analysis, and overall don't have the time to watch the markets every hour. There's an art and science to picking stocks. And there's also an art and science to knowing when to buy, when to sell, and other things that investors who make money do. There's a time commitment to investing in individual stocks. And I think there's also some luck involved in there.
It's important to recognize in life when one is not skilled in something. That's not a cop out, that's just reality. For people like that there are mutual funds and index funds and there's no shame in going that route.
If you buy and hold the companies of the products/services you use all the time you will probably do quite well. I bet many people use Apple products, and use Facebook, Google, Netflix and Amazon nearly everyday. If you bought and hold these you would be doing great. These would be offset recently by any retail store you owned that you may use alot, as these are massively underperforming, but stronger names like Walmart, Kroger, etc. will probably come back nicely over a 3-5 year period. Buy and hold what you know and use all the time and you will do well.
I would not buy names like Walmart, Kroger, etc. unless I was looking for dividends. These companies are established and the stock price is pretty stable. Companies like Apple products, Facebook, Google, Netflix and Amazon are all overpriced and are due for decline soon. If you got in when they were inexpensive years ago then great but the problem is most people are not aware of the company until it is on a run. historical data says that most companies with stock prices rising like these companies eventually come back down and stabilize at a price far lower than they are currently. So it's only a matter of time before they come back down. If you are looking for growth you want to find the next Apple products, Facebook, Google, Netflix and Amazon. but that's the issue...no one really knows what is going to happen...that's picking stocks is not the way for the vast majority or individuals
Ya know, those who claim people should be investing in individual stocks (obviously not so many people on this thread) fail to take into consideration some basic truths.
Lots of people (like me) are not very good at picking stocks, don't know the right things to look for, don't understand technical analysis of stocks or the other types of analysis, and overall don't have the time to watch the markets every hour. There's an art and science to picking stocks. And there's also an art and science to knowing when to buy, when to sell, and other things that investors who make money do. There's a time commitment to investing in individual stocks. And I think there's also some luck involved in there.
It's important to recognize in life when one is not skilled in something. That's not a cop out, that's just reality. For people like that there are mutual funds and index funds and there's no shame in going that route.
I appreciate that most people will not want to buy their own stocks. Their time and energy are consumed by family, career, school, hobbies, etc. I've certainly been in situations in the past where there's no time for anything beyond family and work.
With that said, I encourage people who are interested to go ahead and start the process. Yes it will take some time and some study, but don't be deterred by naysayers who say it's a foolhardy endeavor. And even if after studying one chooses not to go ahead, they will have learned a lot that will likely help them with their investments in the future.
With that said, I encourage people who are interested to go ahead and start the process. Yes it will take some time and some study, but don't be deterred by naysayers who say it's a foolhardy endeavor. And even if after studying one chooses not to go ahead, they will have learned a lot that will likely help them with their investments in the future.
I wouldn't tell an investor that they shouldn't try. There is always the chance of success and of course some do succeed. Warren Buffet is the perfect example.
However, based on my years of investing experience and knowledge, it is my responsibility to warn people that the cards are stacked against them. For most people, it is simply not likely that they will do better over the long term by investing in individual stocks than by investing in a simple index fund. In fact, they can end up losing a lot of money trying to beat the market.
Most people greatly overestimate their investing skills. My father has an IQ of 130, spends hours researching stocks, and his investment performance is as bad as mine was. The word "arrogance" comes to mind.
He grumbles when I tell him that he doesn't know what he's doing.
So your personal investing skills are the issue, not stocks themselves.
How does that make those that can do it better than you idiots?
I wouldn't tell an investor that they shouldn't try. There is always the chance of success and of course some do succeed. Warren Buffet is the perfect example.
However, based on my years of investing experience and knowledge, it is my responsibility to warn people that the cards are stacked against them. For most people, it is simply not likely that they will do better over the long term by investing in individual stocks than by investing in a simple index fund. In fact, they can end up losing a lot of money trying to beat the market.
And so you just turned around in the next paragraph and told them they shouldn't try
The cards are the same for everyone. It's just a matter of how much time and effort one cares to put into it. Of course one can take extreme risks and gamble their entire net worth on a couple of stocks, but that's not the only way to invest. I'm not a risk taker by nature. I choose to invest using fundamentals, patience, and a long-term outlook. In my experience this gives a more predictable outcome than just tracking the market.
I guess my question would be what if you are buying individual stocks but they are not the hot stocks of today? After all, there is a whole universe of available stocks out there. I sold some stock last week and redeployed the proceeds into six new positions and I can pretty much guarantee that none of them are hot stocks.
Hindsight is 20/20. Everybody thinks they can pick the next Amazon or the next Facebook. But it's not as easy as it looks. Very few stocks will become that successful.
But if you have some special insight, it might be worthwhile to try and see if it works. Just understand the risk and opportunity cost, which can be considerable.
Those idiots who bought Amazon at $300, $500, $700 don't look like idiots today.
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