quote:

Originally posted by wishfull thinker:
If you think stock picking doesn't work, Warren Buffet would disagree.

If you think market timing doesn't work, George Soros would disagree.

Both are outliers obviously but their process worked for them. Stock picking worked for people that bought MSFT or AAPL or Google or TSLA early and held on for the ride as well.

If you can move enough dollar volume to drive the market price, then it's a different ballgame. Buffet and Soros can do that, most people can't.

Saying people who bought and held MSFT, APPL, Google, etc. early and held were wise is a foolish statement. Apple nearly went bankrupt in the 90's. Tesla's Model 3 launch was so bad it could have taken the company down. Shit happens, seemingly strong companies can die quickly (Enron?) and values can change dramatically in the short term.

Those who invested in Palm, AOL, WorldCom and other tech companies didn't fare nearly as well. Putting a lot of money in one, or a few, stocks is accepting much higher risk relative to potential return.

There is nothing controversial about what I stated. Most large market advances happen on a few days a year, and broadly affect the market in general. Miss those days and miss the vast majority of returns. The best performing stocks are usually companies you've never heard of. Only through broad diversification can you achieve the average market returns with the best risk tradeoff.

^^^
I didn't say they were wise, I implied they experienced success. If you can find it, buy a great stock with great potential and hold it until it isn't great or you develop weak hands. You don't have to watch it go into the crapper but dips and swings are part of the deal. There are many successful investors that kick the snot out of the averages.

I'm not suggesting day trading or operating like a river-boat gambler with a drinking problem. I am saying that small investors can beat the averages without buying into the promises of average performance by buying average portfolios.

quote:

WorldCom

This was a total scam by Bernie Ebbers. Even while the stock was plummeting he convinced Church members to buy more. He went to prison and then died. Enron is another one.

There are so many ways to trade the stock market. It's disingenuous to say that one approach is valid or invalid. Want to trade? Sure, it can be done but the dedication needed to succeed at trading or timing the market is mind bending.

To illustrate how slippery this subject is, I'll pass along a story often told by Larry Williams, a famous commodity trader;.....

Mr. Williams LOVED to trade pork bellies and this became common knowledge. He was at a seminar and was approached by a broker who had a customer who traded pork bellies with an incredible level of success. Naturally, Mr. Williams was eager to meet this fellow.

The trader walked up to Larry and placed a paper chart of pork bellies on a table and then dangled a part of a surveyor's tripod over the chart. This tool, that this guy used to manage his money, looked like a top suspended by a piece of string .He said that if this thing swayed front to rear, then he would go long. If this same tool went side to side, then he would go short. Mr. Williams, being a methodical and logic based trader, was aghast at this voodoo-like approach to the most vicious commodity contract in existence.

The actual reason that this trader was so successful had nothing to do with his method of choosing a direction. Instead, it was for the simple fact that he always got out of the market at the end of the day if he was in the red - no exceptions. Success in the markets can come from many angles.

I think young people should be taught the conventional basics of investing in a retirement account when they are young - Dollar cost averaging and such. Timing the markets and trading are definitely possible but would take longer than a teacher has available to use. The more esoteric subjects can take a decade or more to learn.

V.

Various investment books say one should investigate companies, read their quarterly reports, understand their market and P/E values, and invest if it makes sense. I've started to question that approach after seeing many companies do well or badly based on emotion, social media trends, and inside knowledge that was only known by a few.

Are approaches in books like The Intelligent Investor by Benjamin Graham still valid and enough to make investment decisions, or has the entire game changed?

quote:

Are approaches in books like The Intelligent Investor by Benjamin Graham still valid and enough to make investment decisions, or has the entire game changed?

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Yes. Warren Buffet remains a proponent. Nothing has really changed Except the easy and affordable access to the markets. Robinhood etc.

I remember this from high school. I bought two stocks, held the entire time and came out in the top three of our class. McDonalds and Office Depot lol.