Does anyone regret not buying individual stocks/staying with index

[jacoavlu]

credit wikipedia

“Cicero writing in the 1st century BC, tells of how a friend of Diagoras tried to convince him of the existence of the gods, by pointing out how many votive pictures tell about people being saved from storms at sea by "dint of vows to the gods", to which Diagoras replied that "there are nowhere any pictures of those who have been shipwrecked and drowned at sea."

[Nysoz]

Max Power, how is it easy to beat the index? All data shows it's insanely difficult to do over a long enough time horizon. Can you point to me some people who have done that on average over 30 years? And if not, how could you expect Dr. Joe Schmo to do it?

I think it’s easy to beat the index but it’s harder to consistently do it for most. Not because finding good companies to invest in is hard, but because of emotions. If you just constantly buy and hold companies you use on a regular basis you would destroy the index.

You log onto Facebook every day, use Amazon to shop. You’re forced to use Microsoft office at work. You go to Walmart and Costco to shop. You like eating at chipotle and dominos and occasionally McDonald’s. You go home and watch Netflix and have Disney+ for the kids. You use your Apple iPhone (and if you’re hip, drive a Tesla). When you don’t know the answer to something you google it. The females in your life loves lululemon (or even male family members too as I’ve heard their pants are actually really comfortable).

if you buy and held these companies, anything else you used on a regular basis and bought stock in would possibly drag down your returns but these would carry your portfolio way past the index.

the problem is the average investor is the average American. They don’t have the luxury of holding investments through downturns because they need to sell stuff to make rent or buy food or Christmas presents. They couldn’t take advantage of the covid dip because they lost their job. They listen to the “professionals” and sell at the bottom and don’t get back in. They try and chase the next hot stock tip long after it’s run up due to fomo and get caught holding the bag. They get scared of losing their life/retirement savings so they sell and don’t get back in.

I’d bet if everyone here listed their 10 favorite companies that they own/shop at/use, just buy and hold forever, they would handily beat the index.

[Anne]

Grace Groner, who was not a financial professional is a good example. We've discussed her on this site before. Outperformed index with stock. Time frame is well over 30 years.

Grace Groner did not have access to index funds when she made her investment in 1935. Index funds were invented in 1975. We’ve discussed that fact before on this forum.

[billy]

I think it’s easy to beat the index but it’s harder to consistently do it for most. Not because finding good companies to invest in is hard, but because of emotions. If you just constantly buy and hold companies you use on a regular basis you would destroy the index.

You log onto Facebook every day, use Amazon to shop. You’re forced to use Microsoft office at work. You go to Walmart and Costco to shop. You like eating at chipotle and dominos and occasionally McDonald’s. You go home and watch Netflix and have Disney+ for the kids. You use your Apple iPhone (and if you’re hip, drive a Tesla). When you don’t know the answer to something you google it. The females in your life loves lululemon (or even male family members too as I’ve heard their pants are actually really comfortable).

if you buy and held these companies, anything else you used on a regular basis and bought stock in would possibly drag down your returns but these would carry your portfolio way past the index.

the problem is the average investor is the average American. They don’t have the luxury of holding investments through downturns because they need to sell stuff to make rent or buy food or Christmas presents. They couldn’t take advantage of the covid dip because they lost their job. They listen to the “professionals” and sell at the bottom and don’t get back in. They try and chase the next hot stock tip long after it’s run up due to fomo and get caught holding the bag. They get scared of losing their life/retirement savings so they sell and don’t get back in.

I’d bet if everyone here listed their 10 favorite companies that they own/shop at/use, just buy and hold forever, they would handily beat the index.

Except 20 years ago everyone loved going to blockbuster to browse the store and pick up movie rentals "eww why would I want to wait for movies to be mailed to me when I want to watch it now- netflix" , used hotmail/aol/yahoo/netzero over google and shopped at Kmart. Its easy to spot the winners retrospectively, but its hard to spot the losers in real time.

[CordMcNally]

I think it’s easy to beat the index but it’s harder to consistently do it for most. Not because finding good companies to invest in is hard, but because of emotions. If you just constantly buy and hold companies you use on a regular basis you would destroy the index.

You log onto Facebook every day, use Amazon to shop. You’re forced to use Microsoft office at work. You go to Walmart and Costco to shop. You like eating at chipotle and dominos and occasionally McDonald’s. You go home and watch Netflix and have Disney+ for the kids. You use your Apple iPhone (and if you’re hip, drive a Tesla). When you don’t know the answer to something you google it. The females in your life loves lululemon (or even male family members too as I’ve heard their pants are actually really comfortable).

if you buy and held these companies, anything else you used on a regular basis and bought stock in would possibly drag down your returns but these would carry your portfolio way past the index.

the problem is the average investor is the average American. They don’t have the luxury of holding investments through downturns because they need to sell stuff to make rent or buy food or Christmas presents. They couldn’t take advantage of the covid dip because they lost their job. They listen to the “professionals” and sell at the bottom and don’t get back in. They try and chase the next hot stock tip long after it’s run up due to fomo and get caught holding the bag. They get scared of losing their life/retirement savings so they sell and don’t get back in.

I’d bet if everyone here listed their 10 favorite companies that they own/shop at/use, just buy and hold forever, they would handily beat the index.

I don't think beating the index and doing it consistently is as easy as you make it out to be. If it were truly that easy, don't you think the big investment companies would have already figured it out?

[VentAlarm]

I think it’s easy to beat the index but it’s harder to consistently do it for most. Not because finding good companies to invest in is hard, but because of emotions. If you just constantly buy and hold companies you use on a regular basis you would destroy the index.

You log onto Facebook every day, use Amazon to shop. You’re forced to use Microsoft office at work. You go to Walmart and Costco to shop. You like eating at chipotle and dominos and occasionally McDonald’s. You go home and watch Netflix and have Disney+ for the kids. You use your Apple iPhone (and if you’re hip, drive a Tesla). When you don’t know the answer to something you google it. The females in your life loves lululemon (or even male family members too as I’ve heard their pants are actually really comfortable).

if you buy and held these companies, anything else you used on a regular basis and bought stock in would possibly drag down your returns but these would carry your portfolio way past the index.

the problem is the average investor is the average American. They don’t have the luxury of holding investments through downturns because they need to sell stuff to make rent or buy food or Christmas presents. They couldn’t take advantage of the covid dip because they lost their job. They listen to the “professionals” and sell at the bottom and don’t get back in. They try and chase the next hot stock tip long after it’s run up due to fomo and get caught holding the bag. They get scared of losing their life/retirement savings so they sell and don’t get back in.

I’d bet if everyone here listed their 10 favorite companies that they own/shop at/use, just buy and hold forever, they would handily beat the index.

You heard that there pants are comfy? Sure....

[wideopenspaces]

What I've found most helpful with RSUs has been to ask myself if the amount that vested was in cash instead of stock, would I buy the same amount of company shares?

Yeah, that's how we've approached it so far, with the answer always being no. I'm not sure what would turn that to a yes, besides our investment account being over 1M and the stock just being a small percentage. We'll see where we are 18 months from now.

[Max Power]

Max Power, how is it easy to beat the index? All data shows it's insanely difficult to do over a long enough time horizon. Can you point to me some people who have done that on average over 30 years? And if not, how could you expect Dr. Joe Schmo to do it?

As was said, it is not too hard. Many posters here beat the average. Millions of individual folks and thousands of investing clubs do. Tons of funds do. You could probably take just FAANG (I would skip F and N since they'd potentially be competed with by upstarts or pressured for market share by big G, but that's just me), and you'll beat the overall S&P handily for the next few years - or more. Check back on it, though... 10% each F A A N G and 50% VOO or some index low cost. Heck, take 50% G and 50% index. You will beat straight index... did this year and will in most/all.

I mentioned in the long Covid market crash thread that FUN and SIX and other overly-punished entertainment ones were good buys. I bought them as they got smashed to smithereens with 70% or more value drop, yet they still have the coasters, real estate, etc ready to make profit when restrictions lift. And guess what... they are up well over 100% in share price since then (definitely up at least 50% up, even if you bought early/late). Would you put more than 10% of your portfolio into a single? Nope, shouldn't... but that return of over 5-6x or even more than what S&P in general 15% YTD did makes up for any of your losers - and then some. This has been a weird 2020 year, though... trader's paradise. It is not good to discuss in general. It will be traders/pickers win - no contest.

...Still, when people feed you that "80% of pro funds don't beat the market average," it is total crap.
That is a holdover from when stated + hidden fees and ERs on funds (mainly "stock blend" mutual funds) were insane... so those funds not only have to beat the 7-8% market average, they also have to take their 2-3%+ in fees, so they actually have to do 9-11% or more returns to "beat." That comparison is like saying affordable medicine can't be done... well, can't be done if it's inefficient and greedy with 100 middle men. That doesn't mean it can't be done.
In reality, half or more of (stock mix) funds beat the market average. A lot beat just with their stock picks and share price gains, and many more beat with all their calls they sell on all their pooled shares held. However, many of those funds just can't return over average to the investors after they take their fees (when compared to no-cost DIY indexes... which never existed until recently). In the end, that comparison is comparing something that doesn't exist much anymore (high fee active managed funds) outside of semi-crooked CFPs to something that didn't exist until recently: low or no-cost index fund DIY options. The only real highway robbery high-fee funds like that are 401k funds... and no, they don't usually beat their index, due to high fees. If you believe that BS overall, though, it would be like believing a study about surgical complication rates before and after the advent of anesthesia or antibiotics... apples to oranges.

As I said, indexing is not at all unwise. It was never dumb, and it is now even better with DIY via low ER index ETFs. It is just not ideal in my eyes. Each person can pick their own path. Best of luck

[CordMcNally]

...Still, when people feed you that "80% of pro funds don't beat the market average," it is total crap.

In reality, half or more of (stock mix) funds beat the market average.

Literally the first search result, I'm sure I could find more if I spent more than 3 second. In short, you're wrong.

Active fund managers trail the S&P 500 for the ninth year in a row in triumph for indexing (cnbc.com)

You're right about the 80% of funds don't beat the market average being total crap...it appears to be 91% over 15 years.

[Turf Doc]

Can anyone point me to a fund that’s beat the index over the last 30 years? Even one?

15 years is interesting too, but aren’t we trying to invest for decades and decades? Sure during one year fund x might do 50% and then find y the next year but it has to beat it every single year for it to beat it overall and that just doesn’t happen.

And is anyone who likes to pick stocks or change funds actually going to calculate what it would’ve been if they just used index funds? And the consequences of the taxes they paid wrt capital gains and what those would have done if they compounded? Almost assuredly not, that would be really complicated. But I’m sure they can all remember that really hot stock they picked that got a 100% return.

index funds are not a get rich quick scheme. Maybe stock picking is better in that regard. But do physicians in particular really need to take that risk for that gain?

[uksho]

Can anyone point me to a fund that’s beat the index over the last 30 years? Even one?

?

Costco since IPO?

[Nysoz]

Except 20 years ago everyone loved going to blockbuster to browse the store and pick up movie rentals "eww why would I want to wait for movies to be mailed to me when I want to watch it now- netflix" , used hotmail/aol/yahoo/netzero over google and shopped at Kmart. Its easy to spot the winners retrospectively, but its hard to spot the losers in real time.

thats also true. As your consumer sentiment changes, your investment choices should too. I should’ve clarified as well. Once you see less and less people in the store or find a better company in that sector then do some diligence and see if the other company would be a better investment. Emotions come into play here as well. You get stuck with these companies as they go down because you’re emotionally invested. Once they’re not the same company or not doing as well or as popular, then move on.

even if you have a few losers, the big gains you have with the winners carry the portfolio. I still use my aol email as well as Gmail. Even if I invested in both I’d beat the index. If you shopped at k mart over Walmart or target then I’m sorry. All the k marts I went to were awful.

it’s definitely riskier than owning the index but concentration builds wealth, diversification preserves it. But as Buffett would recommend most people are better off owning the index.

[Nysoz]

I don't think beating the index and doing it consistently is as easy as you make it out to be. If it were truly that easy, don't you think the big investment companies would have already figured it out?

I’m sure they have some set rules they have to follow in order to invest in a company or how they hold it in their portfolio. Once you’re talking about big money then it’s also hard to get in and out of positions compared to a retail investor.

The big investment companies also mainly look at spreadsheets and the costs associated of being a big company. If you as a consumer are on the ground hold an iPhone or drive a Tesla and you’re passionate that’s this is the most amazing product ever, then it’s worth the investment. if you notice a trend forming that’s disrupting an industry and doing it well, it’s worth an investment.

You should also look at spreadsheets and future growth and forward guidance to see if their goals are attainable and all other diligence before investing in a company though as well.

I also want to clarify that I still maintain most people should be in indexes as it’s the safer play. But I challenge people that if they find a company or product that they really love or are passionate about then consider investing in them as well if it makes sense to.

[Nysoz]

You heard that there pants are comfy? Sure....

well I’m cheap and refuse to spend $120 or whatever it is on a pair of pants. The next time my wife drags me into one I’ll see if I can try on a pair and I’ll report back.

[TheDangerZone]

I’m sure they have some set rules they have to follow in order to invest in a company or how they hold it in their portfolio. Once you’re talking about big money then it’s also hard to get in and out of positions compared to a retail investor.

The big investment companies also mainly look at spreadsheets and the costs associated of being a big company. If you as a consumer are on the ground hold an iPhone or drive a Tesla and you’re passionate that’s this is the most amazing product ever, then it’s worth the investment. if you notice a trend forming that’s disrupting an industry and doing it well, it’s worth an investment.

You should also look at spreadsheets and future growth and forward guidance to see if their goals are attainable and all other diligence before investing in a company though as well.

I also want to clarify that I still maintain most people should be in indexes as it’s the safer play. But I challenge people that if they find a company or product that they really love or are passionate about then consider investing in them as well if it makes sense to.

History is littered with good ideas and good companies that don’t pan out. Investing in your favorite consumer products is clearly not a wise investment strategy. And the idea that you’re somehow going to predict and bail when your promising company starts goes downhill when you see fewer people in the store?? Only in hindsight is it obvious something was going to fail. Blockbuster tried their own mail order DVD service. Google competitors were a dime a dozen. Tesla barely turns a profit and their competition is about to exponentially ramp up. Are you getting out now? If it’s so easy, please keep us informed of your next handful of these buy/sell moves in real time. Seriously.