Even if you do manage to pick the next Apple, you won't know how much money to risk on it or how long to hold it for. And there will be plenty of hand-wringing. Your brain will try to trip you up every step of the way. It's not nearly as easy to hold on to a high flying stock as you think it will be.Adam1226 wrote:I know you can point to companies like Intel, Microsoft, Apple, etc, but they are rare, and very difficult to pick before they are successful.
Indexing vs. Picking
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Re: Indexing vs. Picking
Last edited by Gumby on Tue Feb 08, 2011 6:42 am, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Re: Indexing vs. Picking
Gumby... unless it's part of the VP and you have a solid PP to help you forget about your gambles and look at them with interest, but not fear and anxiety.
... another wonder of having a solid core before taking risks.
... another wonder of having a solid core before taking risks.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: Indexing vs. Picking
True. But, I wasn't talking about fear and anxiety. I'm was referring to regret and second-guessing to maximize your return. It may be interesting to put a few thousand dollars into what may be the next Apple, but if you actually hit a home run, you'll constantly wonder why you didn't invest more than you did. And while it's going up you'll have no idea how to time it to get the greatest return. Should you sell at a 300% return? 400% return? 800% return? 1200% return? 2500% return? or 3200% return? If you do put a lot of money into that home run, you'll be tempted to take your money off the table sooner. That's what picking the next Apple is like. And it can be a decade long roller coaster ride. It's exciting and excruciating, but you'll almost always have some regret. It's emotionally draining.moda0306 wrote: Gumby... unless it's part of the VP and you have a solid PP to help you forget about your gambles and look at them with interest, but not fear and anxiety.
... another wonder of having a solid core before taking risks.
And just when you have it figured out, something unexpected happens. It's far more difficult to maximize your return than it seems like it's going to be. Even if you have a PP, it's difficult not to get emotionally involved in a VP — even if it's just a tiny bit.
Last edited by Gumby on Tue Feb 08, 2011 6:01 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Re: Indexing vs. Picking
Every great trade has two parts: you must buy at the right time AND sell at the right time.
Lots of people get one out of two right; getting them both right is what's hard.
Lots of people get one out of two right; getting them both right is what's hard.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
A: “Not unless round is funny.”
Re: Indexing vs. Picking
I have come to the conclusion that if one wants to hold individual stocks, he should never completely get out of them. If you get lucky and hit a home run, sell half and keep half. That way you are realizing some gains but still staying in the game. This is of course no guarantee of success, but in my opinion stock picking is mostly luck anyway, and this approach minimizes regret on either side.
Of course it goes without saying that this is for money you can afford to lose.
Of course it goes without saying that this is for money you can afford to lose.
"Machines are gonna fail...and the system's gonna fail"