3 ms·

>I'm sure you're correct, all stock picking is dangerous though. I'd assert that my style is the least dangerous. Why? Seems to me that all stock picking has t

• prewett 9y ago
  If the stock market were truly random, then yes, all stock picking would be equally risky. But the stock market is a voting machine voting on the future of companies, and is definitely not random. So you could look at two stock picking strategies: 1) throw darts at the Wall Street Journal and buy whatever it hits, 2) buy new companies that are being used by lots of people in your area (the parent's strategy). #1 should give random results centered around the performance of the entire market. #2 will probably give better results, because it incorporates some information relevant to the voting, namely that customers like the product. Which company would you rather have: some random company or a company that people are willing to stand in a visible line for? If there are lines, either people need the product or they love the product, and either way that tends to correlate with profits.
  • arkitectual 9y ago
    But #2 historically does not give better returns. Since the information is already public it has already been included in the price of the stock. The vast majority of investors are not smarter than Wall Street. As someone who has done some gambling in the stock market using this kind of thinking it has not been a good strategy compared to just buying and holding index funds. Sometimes I get lucky and sometimes I get unlucky buying individual stocks but my most best returns have been buying broad index funds and holding them.
    • inthewoods 9y ago
      Exactly.