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This can work out so great if you do it well. In the legendary books Securities Analysis and The Intelligent Investor they recommend this approach if you are s

This can work out so great if you do it well. In the legendary books Securities Analysis and The Intelligent Investor they recommend this approach if you are serious about researching and they also recommend diversifying into a variety of stocks - certainly more than 3. Personally I like your approach much more and it’s why I’m building https://ultimatestockpicker.com https://ultimatestockpicker.com. I feel like there’s a ton of money rushing into the SP500 and it’s juicing the valuations far too high while there are great companies out there trading at a PE of 5-10.

system2 3y ago
Thank you for your insights.
__loam 3y ago
And the easiest way to diversify is to buy index funds. In the long run you do far less work and you probably beat people picking stocks and trying to compete with extremely well resourced finance firms. The comment above you is a great example of survivorship bias. He picked well. That is rare.
- gen220 3y ago
  FWIW, you can compete in arenas where extremely well resourced finance firms literally don't allocate people. The return on an obligated <5% ownership stake in a <$10Bn company isn't worth the attention of said firms, but is nice if your AUM is <$100mm (i.e. most individuals and approximately zero well-resourced finance firms). I'm not saying it's the best thing to do: it's an allocation of time and energy that you could put towards literally anything else. Basically, it requires ongoing education and discipline, as most worthwhile things do. But it's a valid financial choice and the circumstances for success are less rare than you give it credit for. It's a bit like concluding that it's not worth working for a startup because 90% of "startups" "fail", or whatever the quoted statistic is these days. The published and oft-discussed maps are not a complete representation of the actual territory – there's a lot of nuance in there.

system2 3y ago

Thank you for your insights.

__loam 3y ago

And the easiest way to diversify is to buy index funds. In the long run you do far less work and you probably beat people picking stocks and trying to compete with extremely well resourced finance firms. The comment above you is a great example of survivorship bias. He picked well. That is rare.

gen220 3y ago
FWIW, you can compete in arenas where extremely well resourced finance firms literally don't allocate people. The return on an obligated <5% ownership stake in a <$10Bn company isn't worth the attention of said firms, but is nice if your AUM is <$100mm (i.e. most individuals and approximately zero well-resourced finance firms). I'm not saying it's the best thing to do: it's an allocation of time and energy that you could put towards literally anything else. Basically, it requires ongoing education and discipline, as most worthwhile things do. But it's a valid financial choice and the circumstances for success are less rare than you give it credit for. It's a bit like concluding that it's not worth working for a startup because 90% of "startups" "fail", or whatever the quoted statistic is these days. The published and oft-discussed maps are not a complete representation of the actual territory – there's a lot of nuance in there.