4 ms·

Are you serious? You need a PORTFOLIO of stocks. It is an ONGOING effort.

tormeh 11y ago
Nah. Depends on whether you're in it for the average or the variance. If you're in it for the average you might as well pick an index fund.
- TheLogothete 11y ago
  Don't start with this condescending "nah" when you are going to make a qualification after that and exclude the very case we are discussing here.
  - tormeh 11y ago
    Sorry, didn't know it had condescending connotations.
nostrademons 11y ago
You need an information advantage to pick stocks. You need to have some reason to believe you have information that the rest of the market does not (or that the rest of the market is ignoring), which lets you better estimate the future profits of the company. And then you compare that against the market price, and if the market is being irrational, trade. If you have this, you can get by with a very small portfolio, often just a handful of stocks. And the only ongoing effort is to periodically re-evaluate whether the market has caught on to the information advantage that you're trading on. You do need to continue to keep informed, but daily trading is ridiculous. If you do not have this, you will lose your shirt regardless of how much you diversify.
- TheLogothete 11y ago
  >You need an information advantage Yeah, exactly my point. You need to spend >20 hours to research a single company and will chose to invest in 1 out of 10. Those are the optimistic numbers. So 5 stocks is 1000 hours. How many hours to learn how to do your due diligence? How many hours per month, every month to keep an eye on what is going on and optimize if necessary?
  - jyu 11y ago
    The information advantage is when you know something that's true that most people haven't yet realized to be true, often accredited to Peter Thiel. Examples from the past: - Smartphones > dumb phones (invest in AAPL) - more dollars spent with online ads than TV and Print (invest in GOOG) - cloud computing is better than managing your own servers (invest in AMZN) - eating Chipotle is a better option than McDonalds (invest in CMG) These information advantages are not necessarily gained by spending many hours of research, but a side effect from every day living and working. Will a research analyst realize the impact of a scalable computing API more than engineers that relies on it for their careers? A future example: If you're a programmer using Github for every job in the past 10 years, maybe buying Github stock if it IPO's wouldn't be so bad.
    - TheLogothete 11y ago
      This is exactly the thinking of the average Joe who goes to invest on the bourse and gets slaughtered. The github example is especially apt. Go to Vegas. Better odds.
      - jessaustin 11y ago
        We're all average Joe. "Information advantage" is a very rare thing. Even those who think they have it, probably don't. Maybe they'll learn they don't this month, maybe it will be this year. This is entirely the point of Vanguard.
    - forgetsusername 11y ago
      >often accredited to Peter Thiel Only in Silicon Valley would people give Peter Thiel credit for an concept that's been around for 150 years of investing. >maybe buying Github stock if it IPO's wouldn't be so bad. Maybe? That doesn't sound very certain, and demonstrates how difficult it is to pick these things in advance. Do you know, or not? I mean, it's all well and good to look back at some ideas that were good investments, in hindsight. Do you not think armies of people are trying to find "good" ideas that no one knows about? How many good ideas went nowhere?

Nah. Depends on whether you're in it for the average or the variance. If you're in it for the average you might as well pick an index fund.

TheLogothete 11y ago
Don't start with this condescending "nah" when you are going to make a qualification after that and exclude the very case we are discussing here.
- tormeh 11y ago
  Sorry, didn't know it had condescending connotations.

nostrademons 11y ago

You need an information advantage to pick stocks. You need to have some reason to believe you have information that the rest of the market does not (or that the rest of the market is ignoring), which lets you better estimate the future profits of the company. And then you compare that against the market price, and if the market is being irrational, trade. If you have this, you can get by with a very small portfolio, often just a handful of stocks. And the only ongoing effort is to periodically re-evaluate whether the market has caught on to the information advantage that you're trading on. You do need to continue to keep informed, but daily trading is ridiculous. If you do not have this, you will lose your shirt regardless of how much you diversify.

TheLogothete 11y ago
>You need an information advantage Yeah, exactly my point. You need to spend >20 hours to research a single company and will chose to invest in 1 out of 10. Those are the optimistic numbers. So 5 stocks is 1000 hours. How many hours to learn how to do your due diligence? How many hours per month, every month to keep an eye on what is going on and optimize if necessary?
- jyu 11y ago
  The information advantage is when you know something that's true that most people haven't yet realized to be true, often accredited to Peter Thiel. Examples from the past: - Smartphones > dumb phones (invest in AAPL) - more dollars spent with online ads than TV and Print (invest in GOOG) - cloud computing is better than managing your own servers (invest in AMZN) - eating Chipotle is a better option than McDonalds (invest in CMG) These information advantages are not necessarily gained by spending many hours of research, but a side effect from every day living and working. Will a research analyst realize the impact of a scalable computing API more than engineers that relies on it for their careers? A future example: If you're a programmer using Github for every job in the past 10 years, maybe buying Github stock if it IPO's wouldn't be so bad.
  - TheLogothete 11y ago
    This is exactly the thinking of the average Joe who goes to invest on the bourse and gets slaughtered. The github example is especially apt. Go to Vegas. Better odds.
    - jessaustin 11y ago
      We're all average Joe. "Information advantage" is a very rare thing. Even those who think they have it, probably don't. Maybe they'll learn they don't this month, maybe it will be this year. This is entirely the point of Vanguard.
  - forgetsusername 11y ago
    >often accredited to Peter Thiel Only in Silicon Valley would people give Peter Thiel credit for an concept that's been around for 150 years of investing. >maybe buying Github stock if it IPO's wouldn't be so bad. Maybe? That doesn't sound very certain, and demonstrates how difficult it is to pick these things in advance. Do you know, or not? I mean, it's all well and good to look back at some ideas that were good investments, in hindsight. Do you not think armies of people are trying to find "good" ideas that no one knows about? How many good ideas went nowhere?