I'm running counter-current here. I bought a vaccine maker last year, putting a quarter of my stock portfolio in it over time (several buys on dips). The vaccine maker was then approved, and is one of the biggest ones rolling out globally. This wasn't a one off, as I continued to follow the news and bought more blocks over several months. My portfolio is up a significant amount. On one year blocks, I'll start to sell since it'll be taxed as long-term capital gains. That's non retirement brokerage account. Now in my IRA, I buy and sell every few months on dips and peaks. It doesn't have to be perfectly timed, but it's going up. My portfolio is 70% cash and I've been beating the market the past 5 years.
Other winners include tech companies and a space company.
Someone explain to me why I'm an imbecile and why I should have been invested in Vanguard index funds, something I did for decades prior to thjs.
Stock picking basically has random outcomes. Sure, you may have a few lucky wins in the short term. But over time, your losing bets tend to outnumber your winning bets, and your returns experience what's called reversion to the mean.
This phenomenon has been shown repeatedly in studies of trading behaviour among individual investors (e.g. [1] and [2]), who have been found to collectively destroy wealth for all other investors. Only an absolutely minuscule proportion of traders actually beat the market.
As with any casino, there are winners and losers. But usually the house wins.
Haha, random. Good one. The tech bull run in the last decade has been random? There's no getting through, here.
Stop comparing traders and active funds in your study citations. That's not the benchmark. I'm not a fund (which has its own issues as it has to manage 100s of millions which is different than an account like one of ours), and I'm not a day trader/trader. Buying and holding stocks is hardly a zero sum game. You're confused with day trading and options trading which DOES have two sides of a bet. There's something about humanity that some folks here fail to understand when their noses are in the numbers. Are you trying to sell to me the idea that buying AAPL in the early 2000s was a random pick? I'm done here, all that's happening is I lose points as punishment for questioning orthodoxy.
Buying AAPL in the early 2000s seems obvious now, but it was not obvious then. Prior to the iPhone, in the midst of a market dominated by the likes of Microsoft, a lot of people had very low expectations for Apple. The chances of AAPL beating companies like XOM or GE were not predictable at the time, and you can say the same today about any stock. At the time, you could of course argue for why AAPL would have enormous future growth, but it wouldn't be a prediction, but a bet.
> Someone explain to me why I'm an imbecile and why I should have been invested in Vanguard index funds
Simple: you got lucky in a bull market.
Let's revisit how you're doing in the next recession or after a couple bad bets.
If you want a deeper answer you'll have to do your own digging, as it's a big topic. But it's worth starting with the efficient markets hypothesis and reading some of the work of Jack Bogle.
Why would I have the same strategy during a bear market? How do index funds fare during a bear market? Might the 70 pct cash I have be used for non equity investments, like real estate?
There's something strange about the framing of the passive index fund scenario. Over 20-30 years? I'm not interested in beating that benchmark if I'm interested in increasing my net wealth in the next few years. Downvote away, this is my experience and feeling on the topic, not financial advice to others.
Well you can keep arguing based on your feelings. I'm arguing based on data. You can choose to ignore that data and try your luck. Just recognize your past performance will not guarantee future returns.
Tell that to the legions of Silicon Valley employees who get paid in publicly traded stock as part of their total comp. Those no good, gambling, risk-taking, market-timing risk takers, them! Didn't they read Bogle?
Other winners include tech companies and a space company.
Someone explain to me why I'm an imbecile and why I should have been invested in Vanguard index funds, something I did for decades prior to thjs.