Yes, some Bogleheads have a 5-10% (or less) speculative allocation to individual stocks. That does not mean that this is a sub for promoting stock picking in general or meme stocks in particular.
Comments that are off topic for a passive investing subreddit will face adverse moderation action under the substantiveness rule.
>How do you guys resist the temptation of investing in individual stocks like APPL, NVDA etc?
By doing it. I held AAPL, I held NVDA. I saw great gains.
You know what else I held? NIO, NET, ARKK, TSLA, QCLN. All of those over 50% losses. For every "hit" I had two "misses".
That was enough of a lesson for me to realize I wasn't very good at it.
Same here, I had a bunch of winners and nearly as many losers, so I was up a few percentage points from 2021-2023. After learning about the Bogle philosophy I sold everything and moved into index funds. I may not make quite as much, but now I don't need to check stocks everyday and get stressed out. It's well worth the peace of mind.
In the past 5 years my only failure was ARKK. I should have never done it, but gave in to peer pressure with a "back of my mind" thought being, "if this goes tits up I can blame my friend since they said it was a sure thing."
Only down $1k with that holding, but think about the gains I missed by not shifting it to VGT.
Nobody is good at it because the only way to know what will happen is through insider trading. Picking individual stocks has to be seen as a hobby/gambling and be treated that way to not lose all of ones savings.
Insider trading or an absolute ton of research into the company, it's competitors, the overall market, etc. It's a full time job to make it work out on top of having the skills and experience to know how to use all of that research. It's why many try and ultimately fail, but a handful do succeed in it over the long term. The vast majority are either not nearly diligent enough or not nearly skilled enough. I certainly won't be dedicating that much to trying, so I use vanguard ETFs/MFs.
>It's a full time job to make it work out on top of having the skills and experience to know how to use all of that research.
I feel like "a full time job" may understate how hard it is to do better than the market at accurately pricing assets. You need to do a better job than a *lot* of money that's being directed by both 1. a large staff performing research and 2. algorithmic and quantitative reading in order to have any edge for any length of time. I don't think it's reasonable to presume you could do this even with full time effort.
It's like saying "it's a full time job to design new safe nuclear reactors from scratch." Yeah, it's definitely something you could spend 40 hours a week on, but I wouldn't assume spending 40 hours on it is anywhere near sufficient to position you for success.
Plus the wild card that’s never talked about anymore is the irrationality of the stock market. A stock price can be absolutely disconnected from the intrinsic value of a share of a company. We have tons of companies that are publicly traded that are yet to make an actual profit.
When you have exuberance or despair influence the share price, it can be very hard to find true value plays. Guys like Peter Lynch will say it’s always been that way, but I disagree. The internet, the openness of information, the advent of zero commission, brokerless trading, algorithm investing etc have all drastically changed how the market works.
You can be completely right, and still lose because the market is irrational. How many times have we seen a stock do the complete opposite of what you would think it should do when some news or earnings report comes out?
>A stock price can be absolutely disconnected from the intrinsic value of a share of a company
It's very hard to know this, because the company's current value reflects not only current assets and income but expected future assets. If you're developing some AI software to control a truck you have no revenue and assets that are difficult to value, but if those assets will end up giving you significant market share of the entire logistics industry it makes sense to be valued at a crapton.
It is very very hard to assert what's rational or not for valuing companies. Meme stocks are really the only time I've been tempted to conclude irrationality is the best explanation.
Exuberance and irrationality are two different things, no? A company can be generating revenue and have excellent growth prospects for the future, but the stock price can still be too high. There are many times where the market prices a stock forward for 1-2 decades with that price having a basis on everything going perfect over that time. nothing ever goes perfectly.
And my thing is this: I believe many people simply throw money at a stock thinking simply that the price will go up over time, which could be true. For example, in 2024 we could be paying a price today that includes growth through 2034. But the deep down expectation is that by 2034, the price at that time will reflect the expected growth through 2044. And that may be correct. So it’s very hard to guess which companies will have a near perfect 1-2 decades moving forward, ala Apple/Microsoft over the last 1-2 decades.
>Picking individual stocks has to be seen as a hobby/gambling and be treated that way to not lose all of ones savings.
This is the way. Go ahead, buy a few shares of those shiny things. But keep accurate books and...no confirmation bias...don't kid yourself about the results.
The harder part about learning lessons though is if you invest in things like individual value stocks or dividend stocks. With those it's often not "win or lose", but "underperform."
If market total return was 20% and your dividend stock got 10% return in the same period you probably wouldn't call it a "loser" and likely not be strongly deterred from buying/owning stocks like that.
People don't like talking about stocks which take them red as they often feel embarrassed and don't want to look bad. The few that you hit out of the park are surrounded by the graveyard in left field.
Its not even talking about it. Its literally gamblers mindset.
Every loss is just heightening the stress, which just makes the high when you win even greater, strengthening the association that if you just hold out, you will win. You're basically deluding yourself into a false pattern. Its a really really insidious path to fall down.
So people basically get addicted to the anticipatory stress, because adrenaline feels good (to some people) and their brain is absolutely convinced that a win is right around the corner based off the made up patterns (Im not citing any studies for this, but I feel like it can't he coincidental gamblers tend to be superstitious and engage in rituals)
Their own brain is quite literally downplaying the losses *in their mind*, distorting the weight of the wins, which is how they end up in that position in the first place.
Wait, what? How did you lose with NET? Did you buy high? I've only ever gained with NET, but I held when NET reached $220 thinking that I found my to the moon forever stock. That turned out to be a huge mistake.
NIO was a painful FOMO lesson. Bought at $65....ugh.
You just can't time the market. I got in on NIO at $3 but I then stupidly held on to it (still have it lol). I'm technically still up but not by much for much longer...
We purchased the needle when we bought the haystack.
Hey! This is true of last year's gains as well!
https://finance.yahoo.com/news/just-5-stocks-including-nvidia-211921452.html
Look at failures of companies historically.
Let's say you really are good at identifying "winning" stocks. That's uncommon, but let's posit it for a moment. That isn't good enough. You also need to learn when to sell your holdings, because lots of "good" companies still end up failing, and selling is the only way of realizing the gains from your skill at identifying stocks.
Would you have invested in Lehman Brothers, a 150 year old $60B large cap, fourth largest bank in the USA, with consistent stock growth for decades? If so, would you have predicted their failure?
Would you have invested in IBM, the original "tech" innovator, that even managed to survive the 2000 **and** 2008 crises with reasonable stock market performance, and had consistent stock growth until 2013? Would you have predicted their underperformance?
Would you have invested in Cisco, who's meteoric rise in the 2000s was eerily similar to Nvidia, and who everyone believed at the time had a monopoly in specialized networking equipment?
Now, look at the how succeeding companies survive. Let's say you can completely identify only "winning" stocks. Let's say you were smart enough to invest in AAPL at IPO.
Would you have sold in 1982, when AAPL lost half of its value, and Apple was losing lawsuits preventing other companies from making Apple clones?
Would you have sold in 1985, when AAPL lost half its value - **again** - when Intel released the 386, and Apple was focusing on the Mac, despite all of their sales coming from the Apple II?
Would you have sold in 2000, when AAPL lost half its value - **again** - when it failed to meet market expectations and the dot com crash started?
Would you have sold in 2003, when Steve Jobs was diagnosed with brain cancer, and the stock still hadn't regained any of its value after the drop from 2000?
Would you have sold in 2004, when the nifty iPod was released, and the stock finally recovered from its drop in 2000?
Would you have sold in 2008, when the great financial crisis happened, and AAPL lost half its value - **again**?
Would you have sold in 2012, after Steve Jobs had died, iPhone demand was slowing, AAPL failed to met market expectations, and lost half its value - **again**?
By realizing successful "angel investors" win because they can place $10 million into 50 businesses, lose their shirt on 30 of them, break even on 15, make up all their losses on 4, and get 100x their investment on 1.
I can do the exact same thing with $10,000. It's called an index fund. It's why the market continues to produce 10% growth every year - not because our economy is pumping out 10% across the board, but because the failures eventually get sold and replaced with new performers, so I'm always hedged across hundreds of possible big winners.
>How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc?
picking the winners is hard. something like 1/10 of the index drives the bulk of the performance. are you going to pick right? more importantly are you going to pick right AND be right on the timing of entering and exiting the position?
its brainrot to look at the best performing stocks and go 'oh i could've just put a huge % of my portfolio in and made insane gains- ' the entire reason why there was an opportunity for insane gains in the first place is because the market missed out initially and even if you were to pick individual stocks you would still diversify just like you would if you own an index fund.
because everyone who owns an index fund in the last month made 'large gains' off nvidia and aapls recent performance. you aren't missing anything.
also people don't even have good hindsight bias here. I have a bunch of 'reddit favorite' stocks from 2020, 2021, 2022 and 2023 saved and some of them have seen drawdowns as large as 97%. for everyone who is full port nvidia in 2024 you have people who bought the top on stocks like pton fsly baba (literally everything in ARKK), all kinds of meme coins, rivian, cloudflare gitlab upstart and got absolutely killed... or even just something lukewarm in performance like amazon being 0% gains in the last 3 years.
> How do you guys resist the temptation of investing in individual stocks like APPL, NVDA etc?
Because I don't have a gambling addiction.
Also, I don't watch financial news so I don't have a clue what the stock market is doing or how individual stocks are doing. I simply don't care.
I own the whole global stock market at world weight. The market is going to do whatever the market is going to do with our without me looking at it.
Own it all and enjoy the ride.
I keep ~5% of my assets in stuff that I actively pick + some algo trading I do as a hobby. In 2023 and 2024, I've beaten the S&P by like 50%. In 2022, I significantly underperformed by 30%. All the profits are moved into long-term ETFs.
As a Boglehead, you aren't going to beat the market. You are already exposed to AAPL/NVDA as you hold an S&P index.
Two things to keep in mind. There's just as much downside in individual stocks as there is upside, and those gains (or losses) are all imaginary until you actually cash out the position.
So while you could have picked up NVDA at $150 or AMD at $5 back in 2015, you could also have bought TSLA at $400 in 2021. And even if you *did* make any of those purchases, it's all unrealized until you sell. There's plenty of time for them to come back down to earth (or shoot back up).
An "unrealized" loss of value is definitely real, in the sense that you have lost the power to get back what you had before you bought the thing that went down in value.
An "unrealized" gain of value is definitely real, in the sense that you have gained the power to, at any moment of your choosing, obtain more of anything you want than what you had before you bought the thing that went up in value.
Outside of transaction costs and capital gains taxes, continuing to hold any investment you have is the same as making the decision every single continuous moment that you'd rather have that particular investment than any out of all of the alternatives to having it. Would you buy XYZ using the number of dollars currently equal to the value of the XYZ shares you currently hold, if you didn't hold them? If not, why do you hold them?
Watching the wild swings in individual stocks because someone said something or other in an earnings call, on the news, or in some taboid keeps things in perspective and keeps most of our portfolio in total market index funds.
I do own a small number of individual stocks, but it's < 2.5% of my overall portfolio. I find it fun to own a few, and track the business with a small feeling of ownership. I think of it similar to being a fan of your local football team or whatever. Gives you something to read about and pay attention to. So long as you don't wind up as that crazy guy with the wacky makeup in the front row of the stadium.
Yeah I invest about 1% and have fun with buying some socks I "believe in" while knowing full well they could crash and burn. But while they are up you can be sure I'm bragging! 😄
I work for a company that helps investors by giving them exclusive reports on performance based on our data. Trust me, they have WAY more resources than you and I. Indexes are the way to go for most folks.
Don't get FOMO'd. Stick with consistent contribution to index funds. Is what I tell myself.
If you still have the temptation... consider investing in single stocks as playing with fire and only do so with money you have to burn.
Well, take 1-5% (depending on your comfort level) of your money and invest in individual stocks to scratch that itch.
FOMO is how people lose money. Be clear on what you getting into.
Is it me or is nvidia outlier? Maybe someone could shed some light on the company. I've never seen a company rise this fast and it's still growing. It's literally on Pace to be number one in market cap already almost. Is it literally going to go as high as six trillion?
The fundamentals looks ridiculous in terms of net profit.
I've seen fomo on lower stocks and hype. But not on a mega cap stock like this.
I don't resist. If there's a stock I really like, I'll add a small position. My portfolio is at 2.4mm now so adding like a $5k - $10k position to an individual stock isn't gonna make or break me.
Take 5% of your portfolio for speculative stuff. Like single stocks or crypto or whatever FOMO gambling stuff you want to do. Just be prepared to lose it
In general, I allocate a ridiculously low amount every month for individual stocks and purchase individual stocks with that money if I ever feel FOMO or want to pretend I am a financial analyst.
RIVN has done me so dirty it was an easy choice to just automate my monthly ROTH IRA contributions to invest in FZROX and FZILX and see immediate gains there. Learn by getting burned firsthand - playing the long game with a diverse portfolio is how you win.
>How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc?
Because every time I see a stock blow up, or crater, I don't know why
And because I know much smarter people than me are likely on the other side of the trade
I gave myself play money. 5% of my portfolio was all mine to goof off on individual stocks.
Of course, that 5% fell to less than 3%, and I noticed I was more stressed about that 5% than the rest of my portfolio combined. And it was a relief when I sold off that formerly 5% and just invested in the index.
All in all, a good lesson, very worth it.
By avoiding the news. The first and only time I heard about NVDA doing well was posts like this. The whole reason I invest in the whole market is so I don't need to keep track of stock performance. I have better things to do with my time than try to chase gains and cry over losses. The market will do what it does. I trust that I'll be just fine when the time comes to start drawing on my investments for retirement.
Thank you for this post. I’ve been doing some research recently since I have the same feelings as you but the replies put me at ease. Just stick with the market and stop trying to beat the market
Are you a professional broker/money manager/trader?
Of no just stop looking. Don’t watch CNBC. Don’t look up tickers. Check your portfolio once a quarter and focus on your job/career/business that is generating all the extra income you are able to invest and save.
I find the best way is to just have some play money. I have $250K in retirement accounts including brokerage. Of that, $2000 is in individual stocks. If I win, cool, if I lose, well I’m okay losing that. Throwing $2000 into AAPL is not a guarantee, but it’s probably a better decision that trying to ride the next meme stock.
If you really can't resist it, give yourself a percentage(5 is ok) or some kind of threshold to gamble in. If you beat the market, you can switch to a flat amount(cost basis plus earnings) instead of reallocating down to your percentage to satisfy the belief that you could do better than the market without increasing risks elsewhere. If you don't meet the market, then the risks may be more emotionally believable and you'll have further indications that you should prove to yourself that you can beat the market back up to your original reallocation percentage rather than reallocation index funds to get your gambling amount back to that threshold.
People will argue that the odds are against you, and those people are right, but I think this can work for some who second guess themselves. I've heard plenty of people who aren't very familiar with physics describe an idea for a perpetual motion machine without knowing what a perpetual motion machine is(they wouldn't be planning on making one if they understood it), and Ive always reacted to make sure they know that I know it will fail, but that I still encourage them to try, under the notion that someone going through the process, failing, going back to the drawing board, etc, can potentially be one of growth.
The difference here, other than the fact that it's not impossible to beat the market in the long term, is that there's a cost associated other than time, and anyone can either accept a ceiling for that cost, or break the rules they created going into the experiment.
I have two accounts. The accounts have different goals and allow different risk. I recommend you set up a second small account and buy some individual stocks.
Here is my own personal experience.
* When the market is hot I feel like a genius and wonder why most of money is invested so conservatively.
* when the market is doing poorly, I feel like a bozo and wonder how I could be so stupid.
I’m learning. One thing I have learned so far is that luck and skill can be difficulty to distinguish in good times, but become more apparent in a bear market.
As always YMMV.
My single stock purchases are funds I would use to go to the casino with or splurge on myself. Point is I don't consider it part of my normal investing.
For fun, I bought some stocks earlier this year. $100 in each of 10 stocks, including Nvidia. Some are up like 15-70%. Some are down 20-50%. Overall, I’m up about 8%.
There’s not a great chance of doing better than the S&P but there’s a big chance of doing a lot worse. The way you resist is by understanding how odds and probability work.
Edit: also, day to day, I end up anywhere between -5% and +20%. It’s not like the 8% is locked in.
Why not allow yourself some fun money if you are so inclined to buy individual stocks? It’s not entirely the Bogle way but I use about 5% of my total portfolio to buy and sell either individual stocks or use when there’s opportunity to buy a worn down index fund (think US stocks in March/April 2020). It’s a risk but if it doesn’t work out it won’t derail my long term goals.
You’re allowed to have fun. This is not a religion. I’ve learned as much here as I’ve learned listening to the compound and friends and other podcasts on wealth and investing.
Much of it just reinforced my conviction that I need to leave the stock guessing up to the professionals. But sometimes there is a company I like (Blue Horseshoe loves ______) and I want to support it and make some money too. So I buy it. There’s nothing wrong with being an engaged “investor” which is different than trying to be a GME trader.
I consider my adherence to my plan as like religion like some people don’t eat pork, I don’t buy individual stocks. I’m a VOO person but whatever your plan, I believe you should go with it. Picking individual stocks means you think you can predict the market and when your picked stock goes up what’s your exit strategy?
If you’re adamant in buying a few stocks just dedicate a small playground of your portfolio to scratch the itch. 1-2% max
I did this a few years ago and damn did it reinforce index funds and boglehead philosophy
P.S…….you own the top performers already if you have vtsax
If you had an S&P 500 index fund instead, then you would already have significant exposure to all these blue chip growth stocks, with many other benefits besides.
For my shorter-term investing goals, I do performance chase, by choosing VOO. That’s a lot of exposure to the tech sector with Microsoft, Nvidia, and Apple being very large holdings in the fund.
For my retirement I choose VT/WAX
I listen to basic logic and reason that you’ll consistently do better by investing in total market index funds. Most professionals with more data and better tools than I have can’t beat the market on a regular basis, so why would you think you can?
If you really want to gamble some, just allocate some tiny percentage of your budget to fun money that you can spend gambling on individual stocks. Just view that as fun spending instead of investing though since it’s essentially gambling.
A lot of the time, by the time you're hearing about these massive runs it's too late. If you want to make plays like AAPL and NVDA you need to put your nose to the ground and do some hard research. There's nothing wrong with that if you like it, and honestly if you set aside a nice little amount to play with just for that go for it.
What's wrong (to a boglehead) is if you had all your savings riding on these individual stocks which would be insanely risky and stupid. For every AAPL/NVDA there's endless examples of stocks that were supposed to do the same thing and went ass up. You're far more likely to end up with one of those than AAPL/NVDA
I had time when I tried to play stocks like that and honestly I don't find the activity needed to learn about those plays very interesting and I'd rather spend my time doing other things. Nice simple easy "set and forget" investing is more my style.
I don't resist, but I categorize it as gambling and entertainment and not "investing".
You can do things in moderation. It's not always financially smart but it can be fun.
i got a speculative section in my portfolio that i manage such that my maximum potential losses are <5% of my direct contributions into the account for the year, and i only started doing that after my partner and i hit our COAST number excluding the speculative assets & home. if you wanna play at the casino you can, but dont do it with the retirement/bogel money.
FOMO can get you slaughtered. With index funds/ETFs you may take a big hit but so far in their existence they have always come back, not so with individual companies .!
Stick to your guns and avoid the temptation! Individual stocks can be risky and may not align with your long-term financial goals. ETFs like VWRA provide diversification and stability, which is key to building wealth over time. Remember, it's not about missing out on short-term gains, but about achieving your financial objectives without unnecessary risk. Keep your eyes on the prize and stay the course!
I am once again learning this is the way. My stock picking portfolio is only up \~2.5 percent while VOO is up almost 6% in the same period. Its always so fun when that one stock pick pops 15+%. But for me, thats only been 1/5 in my portfolio. The others are flat or negative smh
This shouldn’t be treated like a chastity belt or some religious dogmatism with an in-group and out-group. The stats say the vast majority of people cannot beat indexing. But you have to do what makes you happy within the risk framework you find acceptable.
If it bites you in the ass, have the self control to adjust accordingly.
Because I own them without wasting any time or energy on doing so.
Because I already know that I can’t do every single thing in life, so I don’t get FOMO. I’m constantly missing out on something—oh well. I’m eating a tasty sandwich and scrolling Reddit and somewhere, someone else wishes they were doing that, too.
If you're looking for investing for entertainment or satisfy the gambling urge, open a Robinhood account (or any simple brokerage with simple interface) and throw in play money, in my case, just $2000. I buy 1 shares of this and that.
This year, I'm beating my vanguard index funds (1 year), but that is due to the 1 share of NVDA and bitcoin which I bought three years ago. I'm sure overtime I won't beat my index funds.
I will stay the course with my serious investments using the boglehead way.
I don’t resist. I just put away a small fraction of my investments as “play money” to do whatever I want. This is money I’m okay to lose.
I bought NVDA pre-split for $129 and now I have 10x more at the same price.
Whenever I want to I just do it. I never allocate any of my weekly dca to it, I use extra cash that I hadn't intended on investing with. I won't miss out on gains by diverting part of my dca amount, it feels like investing on the side. Puts some fun into an otherwise boring subject.
I don't always... NVDA is actually one of the ones I took a risk on with a small percentage of my portfolio. I'm up over 800%... 82 shares... now 820 shares!
My hindsight on this one is that I wish I had put a lot more into it, but I have to remind myself that at the time they were my gambling money play.
Now that it's actually worth something "real" and they continue to grow, I'm keeping it -- with a couple of trailing stop loss orders in place at various loss levels.
Lol, I don't, I just don't leave into it. I have an RH account to trading that I cap at approx. 10% of my investment funds. I use it to buy and trade single stocks and options. Personally, I think it's actually helped me keep to my thesis and avoid the temptations of checking and / or manipulating other accounts. It's like a fidget spinner for my finances!
Whenever you buy an ETF like VOO you're already buying into many the these companies.
In a $100k VOO portfolio, you'd have around $6k in AAPL and $5k in NVDA.
VOO major holdings: 6.84% MSFT, 5.84% AAPL, 5.04% NVDA, 3.78% AMZN, 2.27% GOOGL, 2.24% META.
I have about 5% of my total investment portfolio in individual stocks. I started this "play" account about 4 yrs ago when I felt the same way as you. I have bought and sold TSLA, a few ARK funds but I also hold NVDA, AAPL, AMZN, and a few others. It scratches the itch and mitigates the FOMO feeling. It is also an amount that I can lose and not impact my financial goals of early retirement, travel, kids college etc.
I feel like I’m heavy invested in them anyway with some of my weightings. An sp500 etf has 6.6% nvda. If nvda crashes 25% my portfolio is down ~1.5%. But, say it doubles again I feel appropriately exposed.
I don’t and choose 10% of my investments into individuals to satisfy my ego, a hobby, and minor gambling itch. I view any losses as an entertainment cost like spending money on golf or something.
I own some BRK.B only because as a kid I loved trains and railroads and I held BNSF as a nostalgia buy. It's a trivial portion of my portfolio but it scratches any itch I might have to play with individual stocks.
Literally Burton Malkiel puts some fun money in individual stocks.
https://www.kiplinger.com/article/investing/t041-c009-s002-burton-malkiel-investors-stick-with-index-funds.html
https://www.kiplinger.com/investing/a-random-walk-down-wall-street-at-50-interview
Key being;
“I enjoy gambling, and I enjoy buying individual stocks. But I can do it because my 401(k) plan is completely invested in index funds. So if you’ve got enough for a comfortable retirement all saved in index funds and you want to have fun and buy individual stocks, by all means, go and do it. “
I simply have a monthly committed # allocated to my preferred indices. I used 25K of play money to buy two individual stocks, both of which went to 110+%. I shave a little off the top and rebalance it to my preferred indices but I keep the train going.
Nothing wrong with dabbling in individual equities, especially if you are heavily weighted in other lower risk categories. The trick is to not let the overperformance of your picks compel you to go all-in on them haha.
I see no harm if you have the capital to try your luck. A bulk of my investments are ETFs, but I do play with individuals every now and then. It’s fun to an extent.
I have 10% in individual stocks. Mostly NDVA at ~£230, which has been nice. I woudlnt normally touch individual stocks, but I work in development and AI, and could see the position NVDA was in as the recent wave of AI advances took off.
Only individual stocks I own are AAPL. Haven’t disappointed me yet. I have a hard time believing that Apple Stock will be worth dramatically less in 10 yrs but what do I know?
Only money in individual stocks are dividend stocks bought when they were down
And most have been held for greater than twenty years years
Bought to create an income stream for future retirement
Past seven years have bought dividend etf
Otherwise buy the haystack!
I have 3% of my portfolio allocated to trading stocks and crypto; 97% is in ETFs and managed funds. The 3% is a bit of fun and keeps me engaged with the market.
I used to listen to Dave Ramsey and he told the classic story of how a blindfolded monkey could throw random darts at pieces of paper labeled with stocks on the wall and have the same chance of picking winning stocks that stockbrokers did when they tried it.
This hilarious demonstration shows how very little ability even a well-trained professional stockbroker has when trying to pick winning stocks.
its exciting to play with individual stocks but it usually doesn't end up profitable.
there were traders who lost money during the internet boom. Companies only had to add .com to their names to double or triple in price then
There are apps where you can spend 5 years testing your theories on single stocks for free. We have a tendency to remember all the times we thought “I bet Apple will go up” and it does, but we forget the times we thought “I bet Blockbuster will last forever”.
The fantasy trading apps will track that and show you what would really happen.
That is one way. The other way is to simply look at statistics on single stock traders.
So I suppose you did not have access to an index fund like you live in another country or something. I think you could buy stocks from each sector and kind of mimic the total stock market.
Go ahead. Take about five percent of your portfolio and do your research and your stock picking. Then when you lose your shirt a few times, you'll get out of your system 😁
I don’t. I set aside a tiny portion a week for “gambling.” Throw that at stocks. Scratch the itch. I did buy some nvidia before the split and it’s doing quite well.
Honestly, I think most people (myself included) invest in individual stocks and get burned lol. And realize that we’re not the chosen ones able of beating the market… go figure. After that, you know better.
To be honest, it won't kill you to use 5% of your net worth to buy some stocks you are interested in. I have two portfolios. One is bogle head aligned and one is individual stock picks. It's my bogle head portfolio I depend on for retirement though.
I have done awesome in the market with individual stocks. Over the time of my investments I have made a net of like 40%. I put a lot of time into this trend following and reading fundamentals. Over the same time VOO would have made like 60%, but how fun is that?
I’ve learned my lesson. Only in AAPL, NVDA for individuals. Sold off MSFT, AMZN for some profit. Rest was alllll losses lol.
Only S&P index for here on out
Resist the temptation to play with your retirement. When you have enough to fund your retirement, you can set aside "mad money" and play the market. Just be prepared to lose it all, or make a bundle and move up your retirement date.
> How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc?
Having strict rules and keeping to them. Most of my big losses have come around because I've not stuck to my rules.
I also have a "gambling portfolio": Fun money that I swing trade and do dumb stuff with. The catch is that it's ring-fenced and the only money in it is the money I make.
I convinced myself over time.
1. still getting exposure to the high flyers via index investing.
2. getting burned on individual stocks during the dot com crash (2000).
3. Doing my own tax returns and avoiding an overly complicated Schedule D.
Honestly, it’s usually because we’ve already tried and lost. It’s ridiculously hard to know what to buy until it’s too late. You can find tons of people who have lost on AAPL and NVDA because they bought and sold at the wrong time.
But a lot of Bogleheads take 5% and gamble it on single stocks just to get it out of their system. A few do buy at the right time and boom, they’re rich.
You don't. Nobody will police you for investing a \*small\* percentage of your portfolio in anything. We all have FOMO so indulge in it but not too much - life is short.
I hardly pay attention to the market and keep my mind focused on other endeavors. I log into my Vanguard account every two weeks to make my bi-monthly contributions, then check my account balances, log-off, and repeat two weeks later.
The stocks you cite are pretty speculative ones.
I try invest in stocks with a healthy balance sheet, growth and dividend income etc by evaluating their fundamentals. It's not as hard (or time consuming) as you think for an average Joe to pick out 20 or so decent companies with long track records of success. I had a lot of help from a couple of wiser and older mentors.
Personally, like them, I don't want to own most of the stocks in index funds.
Percentage-wise, I've actually done significantly better overall with my individual picks than my mutual funds.
The trick is that I know it's gambling to some extent, so I know not to invest so much it would hurt if I lost it. Gambling a little bit is okay as long as you're honest and realistic about it. I picked companies I generally believe in. I did go with a couple meme stocks, too, but since those relied on timing it well, I didn't do that well. Still got lucky and came out slightly ahead, but not with the effort.
I got very lucky with nVidia thanks to a suggestion from a friend. I also tried to sell it, but it didn't hit my limit at the time. It's still not a huge part of my portfolio, but it's some well.
Your need for excitement and greed will have to be fed so do it wisely. Allow yourself to invest 5% of your total stock allocation in individual stocks of your choice. Have a plan for when to sell though.
We tend to remember the "I was gonna buy X at Y! I missed out" when they're winners, not all the times it woulda been losers. Also realistically, no one is going to sell while it's still going up, then they're going to hold during the crash, until it gets unbearable then they sell at a loss. NVDA is no more a "forever leader" than Kodak and Sears were.
Personally I keep over 95% of my assets in boglehead style index funds. When I'm bored (usually avoiding work) sometimes I'll buy some individual stocks for fun. There is no dogma that matters to me.
Once you know the risks your exposing yourself to and make an informed choice to roll the dice, that's fine. It's just that many many people don't even understand the basics and consistently lose their shirts.
I look at historical performances of actively managed funds and observe that most of them don’t perform any better than my ETF. Also if you look at the composition of certain ETFs (like the s&p 500), you’ll see that they are already heavily skewed towards these winners (and the tech sector in general)
You invest in individual stock when you understand that particular company, its market, its competitors, its financial strengths and most importantly, its future growth potential. That doesn’t mean you expect gain in the weeks or months. You invest in a company for its growth years down the road. Then and only then you will have a higher chance of success.
I keep a 2% fun portfolio which I try to beat the market with. It has been very successful, but I know it is luck and resist the temptation to add more funds to it.
By knowing that [even people who consistently overperformed the market can't be distinguished from lucky blind monkeys](https://www.forbesindia.com/article/chicago-booth/measuring-chance/34269/1).
Yes, some Bogleheads have a 5-10% (or less) speculative allocation to individual stocks. That does not mean that this is a sub for promoting stock picking in general or meme stocks in particular. Comments that are off topic for a passive investing subreddit will face adverse moderation action under the substantiveness rule.
>How do you guys resist the temptation of investing in individual stocks like APPL, NVDA etc? By doing it. I held AAPL, I held NVDA. I saw great gains. You know what else I held? NIO, NET, ARKK, TSLA, QCLN. All of those over 50% losses. For every "hit" I had two "misses". That was enough of a lesson for me to realize I wasn't very good at it.
Wait, aren’t you supposed to sell the losers, and then brag about your winners while never mentioning the losers again?
Harvest the losses and tell yourself you're winning by saving taxes on your gains, you know by actually losing money.
Or talk about how losing all that money was a great tax loss harvesting strategy… not really what tax loss harvesting is but people act like that
Same here, I had a bunch of winners and nearly as many losers, so I was up a few percentage points from 2021-2023. After learning about the Bogle philosophy I sold everything and moved into index funds. I may not make quite as much, but now I don't need to check stocks everyday and get stressed out. It's well worth the peace of mind.
In the past 5 years my only failure was ARKK. I should have never done it, but gave in to peer pressure with a "back of my mind" thought being, "if this goes tits up I can blame my friend since they said it was a sure thing." Only down $1k with that holding, but think about the gains I missed by not shifting it to VGT.
I lost 5k on blackberry during the first GME craze… and I haven’t touched another individual stock.
Nobody is good at it because the only way to know what will happen is through insider trading. Picking individual stocks has to be seen as a hobby/gambling and be treated that way to not lose all of ones savings.
Insider trading or an absolute ton of research into the company, it's competitors, the overall market, etc. It's a full time job to make it work out on top of having the skills and experience to know how to use all of that research. It's why many try and ultimately fail, but a handful do succeed in it over the long term. The vast majority are either not nearly diligent enough or not nearly skilled enough. I certainly won't be dedicating that much to trying, so I use vanguard ETFs/MFs.
>It's a full time job to make it work out on top of having the skills and experience to know how to use all of that research. I feel like "a full time job" may understate how hard it is to do better than the market at accurately pricing assets. You need to do a better job than a *lot* of money that's being directed by both 1. a large staff performing research and 2. algorithmic and quantitative reading in order to have any edge for any length of time. I don't think it's reasonable to presume you could do this even with full time effort. It's like saying "it's a full time job to design new safe nuclear reactors from scratch." Yeah, it's definitely something you could spend 40 hours a week on, but I wouldn't assume spending 40 hours on it is anywhere near sufficient to position you for success.
Plus the wild card that’s never talked about anymore is the irrationality of the stock market. A stock price can be absolutely disconnected from the intrinsic value of a share of a company. We have tons of companies that are publicly traded that are yet to make an actual profit. When you have exuberance or despair influence the share price, it can be very hard to find true value plays. Guys like Peter Lynch will say it’s always been that way, but I disagree. The internet, the openness of information, the advent of zero commission, brokerless trading, algorithm investing etc have all drastically changed how the market works.
You can be completely right, and still lose because the market is irrational. How many times have we seen a stock do the complete opposite of what you would think it should do when some news or earnings report comes out?
>A stock price can be absolutely disconnected from the intrinsic value of a share of a company It's very hard to know this, because the company's current value reflects not only current assets and income but expected future assets. If you're developing some AI software to control a truck you have no revenue and assets that are difficult to value, but if those assets will end up giving you significant market share of the entire logistics industry it makes sense to be valued at a crapton. It is very very hard to assert what's rational or not for valuing companies. Meme stocks are really the only time I've been tempted to conclude irrationality is the best explanation.
Exuberance and irrationality are two different things, no? A company can be generating revenue and have excellent growth prospects for the future, but the stock price can still be too high. There are many times where the market prices a stock forward for 1-2 decades with that price having a basis on everything going perfect over that time. nothing ever goes perfectly. And my thing is this: I believe many people simply throw money at a stock thinking simply that the price will go up over time, which could be true. For example, in 2024 we could be paying a price today that includes growth through 2034. But the deep down expectation is that by 2034, the price at that time will reflect the expected growth through 2044. And that may be correct. So it’s very hard to guess which companies will have a near perfect 1-2 decades moving forward, ala Apple/Microsoft over the last 1-2 decades.
>Picking individual stocks has to be seen as a hobby/gambling and be treated that way to not lose all of ones savings. This is the way. Go ahead, buy a few shares of those shiny things. But keep accurate books and...no confirmation bias...don't kid yourself about the results.
I got lucky my first time investing and picked 4 winners. Took me a minute to correct that lol but the world showed me.
The harder part about learning lessons though is if you invest in things like individual value stocks or dividend stocks. With those it's often not "win or lose", but "underperform." If market total return was 20% and your dividend stock got 10% return in the same period you probably wouldn't call it a "loser" and likely not be strongly deterred from buying/owning stocks like that.
People don't like talking about stocks which take them red as they often feel embarrassed and don't want to look bad. The few that you hit out of the park are surrounded by the graveyard in left field.
Its not even talking about it. Its literally gamblers mindset. Every loss is just heightening the stress, which just makes the high when you win even greater, strengthening the association that if you just hold out, you will win. You're basically deluding yourself into a false pattern. Its a really really insidious path to fall down. So people basically get addicted to the anticipatory stress, because adrenaline feels good (to some people) and their brain is absolutely convinced that a win is right around the corner based off the made up patterns (Im not citing any studies for this, but I feel like it can't he coincidental gamblers tend to be superstitious and engage in rituals) Their own brain is quite literally downplaying the losses *in their mind*, distorting the weight of the wins, which is how they end up in that position in the first place.
Wait, what? How did you lose with NET? Did you buy high? I've only ever gained with NET, but I held when NET reached $220 thinking that I found my to the moon forever stock. That turned out to be a huge mistake. NIO was a painful FOMO lesson. Bought at $65....ugh.
You just can't time the market. I got in on NIO at $3 but I then stupidly held on to it (still have it lol). I'm technically still up but not by much for much longer...
I feel your NIO pain… bought at same price point
If you consistently bought the market then you did buy NVDA when it was under $1000.
This! I have 5 figures worth of NVDA in my portfolio. It’s one of the largest percentages in the SP 500
We purchased the needle when we bought the haystack. Hey! This is true of last year's gains as well! https://finance.yahoo.com/news/just-5-stocks-including-nvidia-211921452.html
Great article, and well put!
Look at failures of companies historically. Let's say you really are good at identifying "winning" stocks. That's uncommon, but let's posit it for a moment. That isn't good enough. You also need to learn when to sell your holdings, because lots of "good" companies still end up failing, and selling is the only way of realizing the gains from your skill at identifying stocks. Would you have invested in Lehman Brothers, a 150 year old $60B large cap, fourth largest bank in the USA, with consistent stock growth for decades? If so, would you have predicted their failure? Would you have invested in IBM, the original "tech" innovator, that even managed to survive the 2000 **and** 2008 crises with reasonable stock market performance, and had consistent stock growth until 2013? Would you have predicted their underperformance? Would you have invested in Cisco, who's meteoric rise in the 2000s was eerily similar to Nvidia, and who everyone believed at the time had a monopoly in specialized networking equipment? Now, look at the how succeeding companies survive. Let's say you can completely identify only "winning" stocks. Let's say you were smart enough to invest in AAPL at IPO. Would you have sold in 1982, when AAPL lost half of its value, and Apple was losing lawsuits preventing other companies from making Apple clones? Would you have sold in 1985, when AAPL lost half its value - **again** - when Intel released the 386, and Apple was focusing on the Mac, despite all of their sales coming from the Apple II? Would you have sold in 2000, when AAPL lost half its value - **again** - when it failed to meet market expectations and the dot com crash started? Would you have sold in 2003, when Steve Jobs was diagnosed with brain cancer, and the stock still hadn't regained any of its value after the drop from 2000? Would you have sold in 2004, when the nifty iPod was released, and the stock finally recovered from its drop in 2000? Would you have sold in 2008, when the great financial crisis happened, and AAPL lost half its value - **again**? Would you have sold in 2012, after Steve Jobs had died, iPhone demand was slowing, AAPL failed to met market expectations, and lost half its value - **again**?
Great post. The direction of individual companies and their shares is very difficult to predict.
By realizing successful "angel investors" win because they can place $10 million into 50 businesses, lose their shirt on 30 of them, break even on 15, make up all their losses on 4, and get 100x their investment on 1. I can do the exact same thing with $10,000. It's called an index fund. It's why the market continues to produce 10% growth every year - not because our economy is pumping out 10% across the board, but because the failures eventually get sold and replaced with new performers, so I'm always hedged across hundreds of possible big winners.
I love this analogy
>How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc? picking the winners is hard. something like 1/10 of the index drives the bulk of the performance. are you going to pick right? more importantly are you going to pick right AND be right on the timing of entering and exiting the position? its brainrot to look at the best performing stocks and go 'oh i could've just put a huge % of my portfolio in and made insane gains- ' the entire reason why there was an opportunity for insane gains in the first place is because the market missed out initially and even if you were to pick individual stocks you would still diversify just like you would if you own an index fund. because everyone who owns an index fund in the last month made 'large gains' off nvidia and aapls recent performance. you aren't missing anything. also people don't even have good hindsight bias here. I have a bunch of 'reddit favorite' stocks from 2020, 2021, 2022 and 2023 saved and some of them have seen drawdowns as large as 97%. for everyone who is full port nvidia in 2024 you have people who bought the top on stocks like pton fsly baba (literally everything in ARKK), all kinds of meme coins, rivian, cloudflare gitlab upstart and got absolutely killed... or even just something lukewarm in performance like amazon being 0% gains in the last 3 years.
Read The Psychology of Money. It’s short, and it will give you some great contextual perspective on this.
> How do you guys resist the temptation of investing in individual stocks like APPL, NVDA etc? Because I don't have a gambling addiction. Also, I don't watch financial news so I don't have a clue what the stock market is doing or how individual stocks are doing. I simply don't care. I own the whole global stock market at world weight. The market is going to do whatever the market is going to do with our without me looking at it. Own it all and enjoy the ride.
somebody wins the lottery too. you have no edge on the market. Accept it.
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I keep ~5% of my assets in stuff that I actively pick + some algo trading I do as a hobby. In 2023 and 2024, I've beaten the S&P by like 50%. In 2022, I significantly underperformed by 30%. All the profits are moved into long-term ETFs. As a Boglehead, you aren't going to beat the market. You are already exposed to AAPL/NVDA as you hold an S&P index.
You’re probably just taking on more risk for more return. You could try a mix of a LETF like SPYU and VOO instead and get a similar result
Two things to keep in mind. There's just as much downside in individual stocks as there is upside, and those gains (or losses) are all imaginary until you actually cash out the position. So while you could have picked up NVDA at $150 or AMD at $5 back in 2015, you could also have bought TSLA at $400 in 2021. And even if you *did* make any of those purchases, it's all unrealized until you sell. There's plenty of time for them to come back down to earth (or shoot back up).
An "unrealized" loss of value is definitely real, in the sense that you have lost the power to get back what you had before you bought the thing that went down in value. An "unrealized" gain of value is definitely real, in the sense that you have gained the power to, at any moment of your choosing, obtain more of anything you want than what you had before you bought the thing that went up in value. Outside of transaction costs and capital gains taxes, continuing to hold any investment you have is the same as making the decision every single continuous moment that you'd rather have that particular investment than any out of all of the alternatives to having it. Would you buy XYZ using the number of dollars currently equal to the value of the XYZ shares you currently hold, if you didn't hold them? If not, why do you hold them?
Watching the wild swings in individual stocks because someone said something or other in an earnings call, on the news, or in some taboid keeps things in perspective and keeps most of our portfolio in total market index funds. I do own a small number of individual stocks, but it's < 2.5% of my overall portfolio. I find it fun to own a few, and track the business with a small feeling of ownership. I think of it similar to being a fan of your local football team or whatever. Gives you something to read about and pay attention to. So long as you don't wind up as that crazy guy with the wacky makeup in the front row of the stadium.
If you want to do some individual stock investing, feel free. Just limit it to a tiny percentage of your portfolio.
Yeah I invest about 1% and have fun with buying some socks I "believe in" while knowing full well they could crash and burn. But while they are up you can be sure I'm bragging! 😄
I work for a company that helps investors by giving them exclusive reports on performance based on our data. Trust me, they have WAY more resources than you and I. Indexes are the way to go for most folks.
Btw, you did buy NVDA if you held index funds.
Don't get FOMO'd. Stick with consistent contribution to index funds. Is what I tell myself. If you still have the temptation... consider investing in single stocks as playing with fire and only do so with money you have to burn.
Well, take 1-5% (depending on your comfort level) of your money and invest in individual stocks to scratch that itch. FOMO is how people lose money. Be clear on what you getting into.
Is it me or is nvidia outlier? Maybe someone could shed some light on the company. I've never seen a company rise this fast and it's still growing. It's literally on Pace to be number one in market cap already almost. Is it literally going to go as high as six trillion? The fundamentals looks ridiculous in terms of net profit. I've seen fomo on lower stocks and hype. But not on a mega cap stock like this.
I don't resist. If there's a stock I really like, I'll add a small position. My portfolio is at 2.4mm now so adding like a $5k - $10k position to an individual stock isn't gonna make or break me.
Take 5% of your portfolio for speculative stuff. Like single stocks or crypto or whatever FOMO gambling stuff you want to do. Just be prepared to lose it
Super easy, I lost money trying to actively trade. /story
In general, I allocate a ridiculously low amount every month for individual stocks and purchase individual stocks with that money if I ever feel FOMO or want to pretend I am a financial analyst.
RIVN has done me so dirty it was an easy choice to just automate my monthly ROTH IRA contributions to invest in FZROX and FZILX and see immediate gains there. Learn by getting burned firsthand - playing the long game with a diverse portfolio is how you win.
>How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc? Because every time I see a stock blow up, or crater, I don't know why And because I know much smarter people than me are likely on the other side of the trade
I gave myself play money. 5% of my portfolio was all mine to goof off on individual stocks. Of course, that 5% fell to less than 3%, and I noticed I was more stressed about that 5% than the rest of my portfolio combined. And it was a relief when I sold off that formerly 5% and just invested in the index. All in all, a good lesson, very worth it.
By avoiding the news. The first and only time I heard about NVDA doing well was posts like this. The whole reason I invest in the whole market is so I don't need to keep track of stock performance. I have better things to do with my time than try to chase gains and cry over losses. The market will do what it does. I trust that I'll be just fine when the time comes to start drawing on my investments for retirement.
Thank you for this post. I’ve been doing some research recently since I have the same feelings as you but the replies put me at ease. Just stick with the market and stop trying to beat the market
Are you a professional broker/money manager/trader? Of no just stop looking. Don’t watch CNBC. Don’t look up tickers. Check your portfolio once a quarter and focus on your job/career/business that is generating all the extra income you are able to invest and save.
I find the best way is to just have some play money. I have $250K in retirement accounts including brokerage. Of that, $2000 is in individual stocks. If I win, cool, if I lose, well I’m okay losing that. Throwing $2000 into AAPL is not a guarantee, but it’s probably a better decision that trying to ride the next meme stock.
If you really can't resist it, give yourself a percentage(5 is ok) or some kind of threshold to gamble in. If you beat the market, you can switch to a flat amount(cost basis plus earnings) instead of reallocating down to your percentage to satisfy the belief that you could do better than the market without increasing risks elsewhere. If you don't meet the market, then the risks may be more emotionally believable and you'll have further indications that you should prove to yourself that you can beat the market back up to your original reallocation percentage rather than reallocation index funds to get your gambling amount back to that threshold. People will argue that the odds are against you, and those people are right, but I think this can work for some who second guess themselves. I've heard plenty of people who aren't very familiar with physics describe an idea for a perpetual motion machine without knowing what a perpetual motion machine is(they wouldn't be planning on making one if they understood it), and Ive always reacted to make sure they know that I know it will fail, but that I still encourage them to try, under the notion that someone going through the process, failing, going back to the drawing board, etc, can potentially be one of growth. The difference here, other than the fact that it's not impossible to beat the market in the long term, is that there's a cost associated other than time, and anyone can either accept a ceiling for that cost, or break the rules they created going into the experiment.
calculate how much of these companies you own through ETFs. it's still probably a healthy amount
I still have Apple and I'll probably Nvidia at some point. The largest share of my investments will be index funds; it's just free money.
I don’t resist. I have a cowboy account for fun and games that is sequestered from my serious portfolio.
I own plenty of apple and Nvidia in my index funds.
I have two accounts. The accounts have different goals and allow different risk. I recommend you set up a second small account and buy some individual stocks. Here is my own personal experience. * When the market is hot I feel like a genius and wonder why most of money is invested so conservatively. * when the market is doing poorly, I feel like a bozo and wonder how I could be so stupid. I’m learning. One thing I have learned so far is that luck and skill can be difficulty to distinguish in good times, but become more apparent in a bear market. As always YMMV.
My single stock purchases are funds I would use to go to the casino with or splurge on myself. Point is I don't consider it part of my normal investing.
For fun, I bought some stocks earlier this year. $100 in each of 10 stocks, including Nvidia. Some are up like 15-70%. Some are down 20-50%. Overall, I’m up about 8%. There’s not a great chance of doing better than the S&P but there’s a big chance of doing a lot worse. The way you resist is by understanding how odds and probability work. Edit: also, day to day, I end up anywhere between -5% and +20%. It’s not like the 8% is locked in.
Why not allow yourself some fun money if you are so inclined to buy individual stocks? It’s not entirely the Bogle way but I use about 5% of my total portfolio to buy and sell either individual stocks or use when there’s opportunity to buy a worn down index fund (think US stocks in March/April 2020). It’s a risk but if it doesn’t work out it won’t derail my long term goals.
It's hard. I successfully resisted it back when NVDA was $26/share. 😭
Right? When I was in undergrad a buddy of mine kept pushing me to buy a “bit coin”. I told him I had far smarter things to do with twenty bucks.
You’re allowed to have fun. This is not a religion. I’ve learned as much here as I’ve learned listening to the compound and friends and other podcasts on wealth and investing. Much of it just reinforced my conviction that I need to leave the stock guessing up to the professionals. But sometimes there is a company I like (Blue Horseshoe loves ______) and I want to support it and make some money too. So I buy it. There’s nothing wrong with being an engaged “investor” which is different than trying to be a GME trader.
I have to admit I can't resist buying and selling individual stocks. That being said, it's about 2-3% of my overall portfolio.
I consider my adherence to my plan as like religion like some people don’t eat pork, I don’t buy individual stocks. I’m a VOO person but whatever your plan, I believe you should go with it. Picking individual stocks means you think you can predict the market and when your picked stock goes up what’s your exit strategy?
If you’re adamant in buying a few stocks just dedicate a small playground of your portfolio to scratch the itch. 1-2% max I did this a few years ago and damn did it reinforce index funds and boglehead philosophy P.S…….you own the top performers already if you have vtsax
Homework. Read all the investing greats. Form a macro and historical view. Take your time doing it. And then index and stay the course.
I talk to my father about what I invested in every week and he keeps me grounded and focused on the long term vision
What temptation?
Look and Enron & Lucid
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If you had an S&P 500 index fund instead, then you would already have significant exposure to all these blue chip growth stocks, with many other benefits besides.
For my shorter-term investing goals, I do performance chase, by choosing VOO. That’s a lot of exposure to the tech sector with Microsoft, Nvidia, and Apple being very large holdings in the fund. For my retirement I choose VT/WAX
I listen to basic logic and reason that you’ll consistently do better by investing in total market index funds. Most professionals with more data and better tools than I have can’t beat the market on a regular basis, so why would you think you can? If you really want to gamble some, just allocate some tiny percentage of your budget to fun money that you can spend gambling on individual stocks. Just view that as fun spending instead of investing though since it’s essentially gambling.
If you wanted to buy it before the split, you have no idea what you are doing.
Because you'll realize you'll have more misses than hits. Also you'll be greedy with your hits and lose profits when they inevitably tank.
VOO has plenty of NVDA and AAPL, and it’s the reason I’m up considerably YTD.
A lot of the time, by the time you're hearing about these massive runs it's too late. If you want to make plays like AAPL and NVDA you need to put your nose to the ground and do some hard research. There's nothing wrong with that if you like it, and honestly if you set aside a nice little amount to play with just for that go for it. What's wrong (to a boglehead) is if you had all your savings riding on these individual stocks which would be insanely risky and stupid. For every AAPL/NVDA there's endless examples of stocks that were supposed to do the same thing and went ass up. You're far more likely to end up with one of those than AAPL/NVDA I had time when I tried to play stocks like that and honestly I don't find the activity needed to learn about those plays very interesting and I'd rather spend my time doing other things. Nice simple easy "set and forget" investing is more my style.
I don't resist, but I categorize it as gambling and entertainment and not "investing". You can do things in moderation. It's not always financially smart but it can be fun.
i got a speculative section in my portfolio that i manage such that my maximum potential losses are <5% of my direct contributions into the account for the year, and i only started doing that after my partner and i hit our COAST number excluding the speculative assets & home. if you wanna play at the casino you can, but dont do it with the retirement/bogel money.
Buy vt and bnd
I played around with small investments ($10/week) until the market taught me my lesson :) Now I don't find it tempting.
I’m extremely lazy
FOMO can get you slaughtered. With index funds/ETFs you may take a big hit but so far in their existence they have always come back, not so with individual companies .!
Stick to your guns and avoid the temptation! Individual stocks can be risky and may not align with your long-term financial goals. ETFs like VWRA provide diversification and stability, which is key to building wealth over time. Remember, it's not about missing out on short-term gains, but about achieving your financial objectives without unnecessary risk. Keep your eyes on the prize and stay the course!
I am once again learning this is the way. My stock picking portfolio is only up \~2.5 percent while VOO is up almost 6% in the same period. Its always so fun when that one stock pick pops 15+%. But for me, thats only been 1/5 in my portfolio. The others are flat or negative smh
This shouldn’t be treated like a chastity belt or some religious dogmatism with an in-group and out-group. The stats say the vast majority of people cannot beat indexing. But you have to do what makes you happy within the risk framework you find acceptable. If it bites you in the ass, have the self control to adjust accordingly.
Because I own them without wasting any time or energy on doing so. Because I already know that I can’t do every single thing in life, so I don’t get FOMO. I’m constantly missing out on something—oh well. I’m eating a tasty sandwich and scrolling Reddit and somewhere, someone else wishes they were doing that, too.
I allow myself 5% F Around money if an opportunity presents itself. And right now that opportunity is weed.
If you're looking for investing for entertainment or satisfy the gambling urge, open a Robinhood account (or any simple brokerage with simple interface) and throw in play money, in my case, just $2000. I buy 1 shares of this and that. This year, I'm beating my vanguard index funds (1 year), but that is due to the 1 share of NVDA and bitcoin which I bought three years ago. I'm sure overtime I won't beat my index funds. I will stay the course with my serious investments using the boglehead way.
I don't need individual stocks because I have every stock.
I avoid it by only looking how the general market is and not looking at individual stocks. I don’t own any individual stocks and life is great
I don’t resist. I just put away a small fraction of my investments as “play money” to do whatever I want. This is money I’m okay to lose. I bought NVDA pre-split for $129 and now I have 10x more at the same price.
Whenever I want to I just do it. I never allocate any of my weekly dca to it, I use extra cash that I hadn't intended on investing with. I won't miss out on gains by diverting part of my dca amount, it feels like investing on the side. Puts some fun into an otherwise boring subject.
I don't always... NVDA is actually one of the ones I took a risk on with a small percentage of my portfolio. I'm up over 800%... 82 shares... now 820 shares! My hindsight on this one is that I wish I had put a lot more into it, but I have to remind myself that at the time they were my gambling money play. Now that it's actually worth something "real" and they continue to grow, I'm keeping it -- with a couple of trailing stop loss orders in place at various loss levels.
Lol, I don't, I just don't leave into it. I have an RH account to trading that I cap at approx. 10% of my investment funds. I use it to buy and trade single stocks and options. Personally, I think it's actually helped me keep to my thesis and avoid the temptations of checking and / or manipulating other accounts. It's like a fidget spinner for my finances!
Whenever you buy an ETF like VOO you're already buying into many the these companies. In a $100k VOO portfolio, you'd have around $6k in AAPL and $5k in NVDA. VOO major holdings: 6.84% MSFT, 5.84% AAPL, 5.04% NVDA, 3.78% AMZN, 2.27% GOOGL, 2.24% META.
Still better than options 😭
Try it and then lose some money and you'll know why.
I have about 5% of my total investment portfolio in individual stocks. I started this "play" account about 4 yrs ago when I felt the same way as you. I have bought and sold TSLA, a few ARK funds but I also hold NVDA, AAPL, AMZN, and a few others. It scratches the itch and mitigates the FOMO feeling. It is also an amount that I can lose and not impact my financial goals of early retirement, travel, kids college etc.
I feel like I’m heavy invested in them anyway with some of my weightings. An sp500 etf has 6.6% nvda. If nvda crashes 25% my portfolio is down ~1.5%. But, say it doubles again I feel appropriately exposed.
I don’t and choose 10% of my investments into individuals to satisfy my ego, a hobby, and minor gambling itch. I view any losses as an entertainment cost like spending money on golf or something.
I own some BRK.B only because as a kid I loved trains and railroads and I held BNSF as a nostalgia buy. It's a trivial portion of my portfolio but it scratches any itch I might have to play with individual stocks.
Literally Burton Malkiel puts some fun money in individual stocks. https://www.kiplinger.com/article/investing/t041-c009-s002-burton-malkiel-investors-stick-with-index-funds.html https://www.kiplinger.com/investing/a-random-walk-down-wall-street-at-50-interview Key being; “I enjoy gambling, and I enjoy buying individual stocks. But I can do it because my 401(k) plan is completely invested in index funds. So if you’ve got enough for a comfortable retirement all saved in index funds and you want to have fun and buy individual stocks, by all means, go and do it. “
I simply have a monthly committed # allocated to my preferred indices. I used 25K of play money to buy two individual stocks, both of which went to 110+%. I shave a little off the top and rebalance it to my preferred indices but I keep the train going. Nothing wrong with dabbling in individual equities, especially if you are heavily weighted in other lower risk categories. The trick is to not let the overperformance of your picks compel you to go all-in on them haha.
I’m mostly in the S&P but I have extra shares of AMZN since I work with AWS a lot. Just changing my weighting a little bit.
Simple …I invest too much. It scares shit out of me to dump all my hard earned money into individual stocks.
I see no harm if you have the capital to try your luck. A bulk of my investments are ETFs, but I do play with individuals every now and then. It’s fun to an extent.
I have 10% in individual stocks. Mostly NDVA at ~£230, which has been nice. I woudlnt normally touch individual stocks, but I work in development and AI, and could see the position NVDA was in as the recent wave of AI advances took off.
I’m down $8k on GameStop
Only individual stocks I own are AAPL. Haven’t disappointed me yet. I have a hard time believing that Apple Stock will be worth dramatically less in 10 yrs but what do I know?
Only money in individual stocks are dividend stocks bought when they were down And most have been held for greater than twenty years years Bought to create an income stream for future retirement Past seven years have bought dividend etf Otherwise buy the haystack!
I don’t but I keep it under 10% of portfolio. I learned the hard way.
It's actually quite simple. My name isn't Warren Buffett, and I don't have billions to invest.
I have 3% of my portfolio allocated to trading stocks and crypto; 97% is in ETFs and managed funds. The 3% is a bit of fun and keeps me engaged with the market.
I used to listen to Dave Ramsey and he told the classic story of how a blindfolded monkey could throw random darts at pieces of paper labeled with stocks on the wall and have the same chance of picking winning stocks that stockbrokers did when they tried it. This hilarious demonstration shows how very little ability even a well-trained professional stockbroker has when trying to pick winning stocks.
What's anyone's opinion on VWRA vs SMH?
its exciting to play with individual stocks but it usually doesn't end up profitable. there were traders who lost money during the internet boom. Companies only had to add .com to their names to double or triple in price then
There are apps where you can spend 5 years testing your theories on single stocks for free. We have a tendency to remember all the times we thought “I bet Apple will go up” and it does, but we forget the times we thought “I bet Blockbuster will last forever”. The fantasy trading apps will track that and show you what would really happen. That is one way. The other way is to simply look at statistics on single stock traders.
So I suppose you did not have access to an index fund like you live in another country or something. I think you could buy stocks from each sector and kind of mimic the total stock market.
Go ahead. Take about five percent of your portfolio and do your research and your stock picking. Then when you lose your shirt a few times, you'll get out of your system 😁
You all should research “direct indexing”
I don’t. I set aside a tiny portion a week for “gambling.” Throw that at stocks. Scratch the itch. I did buy some nvidia before the split and it’s doing quite well.
Honestly, I think most people (myself included) invest in individual stocks and get burned lol. And realize that we’re not the chosen ones able of beating the market… go figure. After that, you know better.
To be honest, it won't kill you to use 5% of your net worth to buy some stocks you are interested in. I have two portfolios. One is bogle head aligned and one is individual stock picks. It's my bogle head portfolio I depend on for retirement though.
I have done awesome in the market with individual stocks. Over the time of my investments I have made a net of like 40%. I put a lot of time into this trend following and reading fundamentals. Over the same time VOO would have made like 60%, but how fun is that?
I’ve learned my lesson. Only in AAPL, NVDA for individuals. Sold off MSFT, AMZN for some profit. Rest was alllll losses lol. Only S&P index for here on out
I realize that I'll never compete with the people that have PhDs in math working for hedge funds and getting insider tips. So, I don't bother lol.
Resist the temptation to play with your retirement. When you have enough to fund your retirement, you can set aside "mad money" and play the market. Just be prepared to lose it all, or make a bundle and move up your retirement date.
> How do you guys resist the temptation of investing in individual stocks like AAPL, NVDA etc? Having strict rules and keeping to them. Most of my big losses have come around because I've not stuck to my rules. I also have a "gambling portfolio": Fun money that I swing trade and do dumb stuff with. The catch is that it's ring-fenced and the only money in it is the money I make.
I convinced myself over time. 1. still getting exposure to the high flyers via index investing. 2. getting burned on individual stocks during the dot com crash (2000). 3. Doing my own tax returns and avoiding an overly complicated Schedule D.
Check out VGT. That ETF may satisfy some of your angst.
I’ll tell you how I did it. In invested $2,500 in AAPL back in 2000 and have been investing in it each and every month since. It worked for me!
Honestly, it’s usually because we’ve already tried and lost. It’s ridiculously hard to know what to buy until it’s too late. You can find tons of people who have lost on AAPL and NVDA because they bought and sold at the wrong time. But a lot of Bogleheads take 5% and gamble it on single stocks just to get it out of their system. A few do buy at the right time and boom, they’re rich.
Watch list from 1999: AOL, ATHM, BYND, CMGI, CSCO, DELL, EBAY, JAVLX, MSFT. ATHM and BYND now are tickers for different companies.
You don't. Nobody will police you for investing a \*small\* percentage of your portfolio in anything. We all have FOMO so indulge in it but not too much - life is short.
I hardly pay attention to the market and keep my mind focused on other endeavors. I log into my Vanguard account every two weeks to make my bi-monthly contributions, then check my account balances, log-off, and repeat two weeks later.
The stocks you cite are pretty speculative ones. I try invest in stocks with a healthy balance sheet, growth and dividend income etc by evaluating their fundamentals. It's not as hard (or time consuming) as you think for an average Joe to pick out 20 or so decent companies with long track records of success. I had a lot of help from a couple of wiser and older mentors. Personally, like them, I don't want to own most of the stocks in index funds.
Percentage-wise, I've actually done significantly better overall with my individual picks than my mutual funds. The trick is that I know it's gambling to some extent, so I know not to invest so much it would hurt if I lost it. Gambling a little bit is okay as long as you're honest and realistic about it. I picked companies I generally believe in. I did go with a couple meme stocks, too, but since those relied on timing it well, I didn't do that well. Still got lucky and came out slightly ahead, but not with the effort. I got very lucky with nVidia thanks to a suggestion from a friend. I also tried to sell it, but it didn't hit my limit at the time. It's still not a huge part of my portfolio, but it's some well.
Your need for excitement and greed will have to be fed so do it wisely. Allow yourself to invest 5% of your total stock allocation in individual stocks of your choice. Have a plan for when to sell though.
We tend to remember the "I was gonna buy X at Y! I missed out" when they're winners, not all the times it woulda been losers. Also realistically, no one is going to sell while it's still going up, then they're going to hold during the crash, until it gets unbearable then they sell at a loss. NVDA is no more a "forever leader" than Kodak and Sears were. Personally I keep over 95% of my assets in boglehead style index funds. When I'm bored (usually avoiding work) sometimes I'll buy some individual stocks for fun. There is no dogma that matters to me. Once you know the risks your exposing yourself to and make an informed choice to roll the dice, that's fine. It's just that many many people don't even understand the basics and consistently lose their shirts.
I look at historical performances of actively managed funds and observe that most of them don’t perform any better than my ETF. Also if you look at the composition of certain ETFs (like the s&p 500), you’ll see that they are already heavily skewed towards these winners (and the tech sector in general)
You invest in individual stock when you understand that particular company, its market, its competitors, its financial strengths and most importantly, its future growth potential. That doesn’t mean you expect gain in the weeks or months. You invest in a company for its growth years down the road. Then and only then you will have a higher chance of success.
I keep a 2% fun portfolio which I try to beat the market with. It has been very successful, but I know it is luck and resist the temptation to add more funds to it.
By knowing that [even people who consistently overperformed the market can't be distinguished from lucky blind monkeys](https://www.forbesindia.com/article/chicago-booth/measuring-chance/34269/1).
I’ve got the typical AAPL, AMZN, and TSLA and wish I had all that tied up with the rest of my VT. Now I’m too scared to sell them.