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Buying indexes is definitely safer than individual stocks, but also leads to lower returns over the long term compared to winning stocks. Also, they only go up

Buying indexes is definitely safer than individual stocks, but also leads to lower returns over the long term compared to winning stocks. Also, they only go up while the market is going up. If you're just betting on the market, might as well buy and hold something like XIV and get higher returns/pay no fee on it.

pembrook 10y ago
This comment is so wrong I don't even know where to begin.
- artursapek 10y ago
  What a condescending response. How is it wrong? Look at VFINX for example: - VFINX is up 72% in 10 years. AMZN for example is up 1220% in the same 10 years. - VFINX is up 72% in 5 years. XIV is up 530% in the same 5 years.
  - pembrook 10y ago
    "Just pick winning stocks" and "sell them before they go down" are not strategies that any human OR algorithm has been able to perform consistently over long time frames. And no, Warren Buffet didn't make his fortune just trading stocks. So I assume based on your strategy you put all of your money in AMZN 10 years ago, sold it right before each drop, re-bought right before each rise, and are now filthy rich. Oh you're not? I wonder why. Also, XIV is an inverse volatility trading vehicle. It's not meant for long term investors and frequently goes through 90% drops. This kind of extreme volatility is corrosive for long term returns. The last 5 years have had abnormally low volatility due to extremely low interest rates, hence why that ETF has done so well over that time period. Of course it's effortless to cherry pick winners when looking backwards instead of forwards.
    - artursapek 10y ago
      > So I assume based on your strategy you put all of your money in AMZN 10 years ago, sold it right before each drop, re-bought right before each rise, and are now filthy rich. Oh you're not? I wonder why. No, that's just a buy-and-hold... just the same as an index fund. I didn't cherry pick anything. Plenty of high profile stocks went up more than 72% in the last 10 years. They're not even hard to find.
      - pembrook 10y ago
        Of course it's not hard to find stocks today that went up over 72% in the PREVIOUS 10 years. That's not the problem. The problem is how do you pick the ones that will beat the market beforehand, when everybody has access to the same information about the prospects for future growth & earnings? It's been proven by hundreds of studies to be a statistical near-impossibility over long periods of time. Any outperformance over the short term can be mathematically reframed as random luck (which a retail investor like you and I will incorrectly attribute to being the result of our own abilities).
  - fuckemem 10y ago
    Lookup: Survivorship Bias
    - Qub3d 10y ago
      Hey, xkcd just made a really good comic about that! https://xkcd.com/1827/ https://xkcd.com/1827/
  - ceejayoz 10y ago
    > How is it wrong? Look at VFINX for example: That's like looking up last night's lottery numbers and picking them for tonight's ticket because they won last time. It's not hard to find stocks that have done well. It's hard to find stocks that will do well, and do better than the market as a whole, and to never make a mistake and pick one that goes bankrupt.

pembrook 10y ago

This comment is so wrong I don't even know where to begin.

artursapek 10y ago
What a condescending response. How is it wrong? Look at VFINX for example: - VFINX is up 72% in 10 years. AMZN for example is up 1220% in the same 10 years. - VFINX is up 72% in 5 years. XIV is up 530% in the same 5 years.
- pembrook 10y ago
  "Just pick winning stocks" and "sell them before they go down" are not strategies that any human OR algorithm has been able to perform consistently over long time frames. And no, Warren Buffet didn't make his fortune just trading stocks. So I assume based on your strategy you put all of your money in AMZN 10 years ago, sold it right before each drop, re-bought right before each rise, and are now filthy rich. Oh you're not? I wonder why. Also, XIV is an inverse volatility trading vehicle. It's not meant for long term investors and frequently goes through 90% drops. This kind of extreme volatility is corrosive for long term returns. The last 5 years have had abnormally low volatility due to extremely low interest rates, hence why that ETF has done so well over that time period. Of course it's effortless to cherry pick winners when looking backwards instead of forwards.
  - artursapek 10y ago
    > So I assume based on your strategy you put all of your money in AMZN 10 years ago, sold it right before each drop, re-bought right before each rise, and are now filthy rich. Oh you're not? I wonder why. No, that's just a buy-and-hold... just the same as an index fund. I didn't cherry pick anything. Plenty of high profile stocks went up more than 72% in the last 10 years. They're not even hard to find.
    - pembrook 10y ago
      Of course it's not hard to find stocks today that went up over 72% in the PREVIOUS 10 years. That's not the problem. The problem is how do you pick the ones that will beat the market beforehand, when everybody has access to the same information about the prospects for future growth & earnings? It's been proven by hundreds of studies to be a statistical near-impossibility over long periods of time. Any outperformance over the short term can be mathematically reframed as random luck (which a retail investor like you and I will incorrectly attribute to being the result of our own abilities).
- fuckemem 10y ago
  Lookup: Survivorship Bias
  - Qub3d 10y ago
    Hey, xkcd just made a really good comic about that! https://xkcd.com/1827/ https://xkcd.com/1827/
- ceejayoz 10y ago
  > How is it wrong? Look at VFINX for example: That's like looking up last night's lottery numbers and picking them for tonight's ticket because they won last time. It's not hard to find stocks that have done well. It's hard to find stocks that will do well, and do better than the market as a whole, and to never make a mistake and pick one that goes bankrupt.