3 ms·
A lot of shit can happen to individual companies that is unanticipated or unlucky. For example, Boeing had been a pillar of American engineering for a long time
by __loam 3y ago
A lot of shit can happen to individual companies that is unanticipated or unlucky. For example, Boeing had been a pillar of American engineering for a long time. We had no reason to doubt that the producer of one of the most prolific and reliable jet liners would ever have any issues, but then it did. The facts are that it is incredibly hard to predict the trajectory of individual companies even with insider information. The hedge against acts of God is diversification, and the best way to do that is index funds.
Frankly your advice of do your own research and only invest in "good" companies is incredibly irresponsible advice. That you survived and did well is not proof that your strategy is good, just that you in particular are lucky. The most reliable way to grow and preserve wealth is diversity.
- saberience 3y agoWell I guess I've been lucky for ten years in a row then. Maybe you should tell Warren Buffet he got lucky too. Doing research and investing based on it isn't being lucky. It's called being prepared. Rolling a dice and picking stocks and then making money IS being lucky. If you massively diversify you are just going to get whatever the market gets and no alpha. If you are close to retirement, this makes sense. But for young people, generally your risk tolerance is higher and you have more time too. Here it makes sense to learn about companies, research, do your due diligence, and invest in individual companies.