Does anyone regret not buying individual stocks/staying with index

[Random1]

I think it is easy to think you are good at picking stocks when the market goes up, it is called recency bias. The real skill is picking winners when the market is going down. I bet if you could do that consistently you would be working on wall street and not hanging out on line with a bunch of boring indexers.

[CordMcNally]

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.

No. If it were easy then everyone on Wall Street (and every other self-proclaimed day trader) would be raking it in. There's more to it then just finding a product or company that you're passionate about. I know Tesla recently makes it seem like it's all really that easy but it isn't. The bull market over the last several months really affected people's perception between getting lucky and being able to successfully select stock winners.

[jacoavlu]

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

Costco since IPO?

Costco isn't a mutual fund

[Tim]

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

Would it help?

https://www.google.com/amp/s/amp.economist.com/finance-and-economics/2020/07/30/bridgewater-faces-losses-and-a-lawsuit

Chasing yield on bonds has risk.
Chasing returns has risk, funds or stock.

[EntrepreneurMD]

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.

Right. She did not have the option of underperforming her returns with indexing...at least not until indexing became an option. Wisely, she declined herd mentality to her continued benefit. What a smart, educated, capable lady with self-confidence. Master of her finances. Ambitious. Motivated. Outperformed docs who are “comfortable” with mediocrity due to their good income. My buddy Warren did the same. Titans.

[xraygoggles]

No. If it were easy then everyone on Wall Street (and every other self-proclaimed day trader) would be raking it in. There's more to it then just finding a product or company that you're passionate about. I know Tesla recently makes it seem like it's all really that easy but it isn't. The bull market over the last several months really affected people's perception between getting lucky and being able to successfully select stock winners.

Agree; this year since March must be what all of you that were around and investing during the dot-com boom must have felt like.

New all-time highs every week in growth stocks. IPOs 2x on the same day. Feels like getting a windfall almost every month in your portfolio. Of course, it's mainly from the massive asset buying spree by the Fed, combined with low interest rates, vaccine optimism, mixed with good ole fashioned gambling. It just so happened that the massive speculation going on in the world of tech, crypto, and EV is occurring at the same time, which leads to even more exponential gains, if you happen to be holding on to some or all of these plays.

Better to be lucky than good.

[Turf Doc]

Grace Groner is a pretty hilarious example. From what I can see she owned stock in one company that did well... really? This is the example we're using to say maybe index funds are the not the best way to invest? Hmm, i wonder if, on average, people who hold only one stock do better or worse than people who hold an index fund. The world may never know.

It's interesting that no matter how much evidence there is that trying to pick stocks and managers to outperform the market is a losing strategy, people's hubris will preclude them from accepting the market's return. Then again, I suppose this phenomenon is also the reason I'll be such a "talented" investor.

[xraygoggles]

My buddy Warren did the same. Titans.

Speaking of big B, there's rumors he has a stake in Tesla recently. That, combined with his known stakes in Snowflake and Apple, and selling of airlines/banks, make Berkshire a growth play now?

He certainly owes almost all his returns this year to those choices, that's for sure.

[Zaphod]

Really, you can crush most stock pickers LONG TERM records with some leverage

please explain this process. If I have enough money to buy any stock I want what is the purpose of taking a loan to buy more stock ?

You are buying more stock, thats it, thats the whole thing. Market goes up over longer periods. As long as you're not crazy levered, its a long term win. Im not talking 2-300%, 25-50, etc....

[jacoavlu]

Hmm, i wonder if, on average, people who hold only one stock do better or worse than people who hold an index fund. The world may never know.

actually, on average, they do the same. That’s the way averages work

but when N=1 results may be far from average

[Zaphod]

if you could go back 10, 20, 30 years in time take out a big loan with low interest to buy market index, would you?

so if would of thought about this idea in 1970, took out a loan for $100,000 at 7 % (thats what the rates were then) and bought the S&P500 index on margin with borrowed money and held it for 10 years. The index over the 10 yeas did not go up but I would still be on the hook for interest payments of 7% x 10 years. This idea seems to work a whole lot better if the market goes up.

Thats not really how leverage works for stocks, ie, you dont have to take out said loan seperately. You're just allowed to buy more of the index than the actual real dollars you have put in, and are charged some fee on top of that. You can delever instantly at any time, etc...

Now one can simply buy a 2x s/p fund as well and get similar exposure for less than 1% cost, there may be less levered versions as well. Not exactly the same as a margin loan but materially not different, not callable, etc...

[Zaphod]

if you could go back 10, 20, 30 years in time take out a big loan with low interest to buy market index, would you?

so if would of thought about this idea in 1970, took out a loan for $100,000 at 7 % (thats what the rates were then) and bought the S&P500 index on margin with borrowed money and held it for 10 years. The index over the 10 yeas did not go up but I would still be on the hook for interest payments of 7% x 10 years. This idea seems to work a whole lot better if the market goes up.

and of course you would still have said stock exposure after loan expires, and compounds still until today, which would be massive ofc.

[Random1]

and of course you would still have said stock exposure after loan expires, and compounds still until today, which would be massive ofc.

after 10 years I would have $100,000 worth of stock - $39,000 worth of interest payment and $100,000 of principle, my networth would be down by $39000

[Zaphod]

I can't handle it!!!!! ;-)
But he will vest more stock every 6 months moving forward so I *could* keep some of that. The problem is that we are getting so much stock in the next couple years that even if we only kept half of it, it would make up too big of a chunk of our overall portfolio and I'm not comfortable with that. If he leaves current employer in 2 years, we might keep 50-100k of the last portion that vests but only if it stresses me out less by then.

Its really ok if you just put everything else into index funds. Maybe sell outrageous calls against it at one year, or one month and let the market take it off your hands but get a premium payment for that.

Lots of options, I understand though. You'll probably want to keep some however to minimize taxes and regret.

[Anne]

Right. She did not have the option of underperforming her returns with indexing...at least not until indexing became an option. Wisely, she declined herd mentality to her continued benefit. What a smart, educated, capable lady with self-confidence. Master of her finances. Ambitious. Motivated. Outperformed docs who are “comfortable” with mediocrity due to their good income. My buddy Warren did the same. Titans.

I obviously didn’t know Ms. Groner but from what I’ve read she bought a few shares for a company she was familiar with because she worked for them and then left it alone, reinvesting the dividends. Got lucky with working for/buying a company that did well but most importantly seems she lived her life simply without hubris or hyperbole. I recommend that last strategy to all.