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Why bother picking stocks, just go with S&P index etf (SPY)
Old 02-21-2013, 07:34 PM   #1
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Why bother picking stocks, just go with S&P index etf (SPY)

I spent my whole life investing in various stocks, thinking I was smarter than the others and could outperform the market. I did ok, but some of the success could have just been luck. I now only trade in stock indexes, as I hated the insider information and manipulation that would occur with individual stocks. I don't believe that is possible with a large index fund such as SPY. So in your AA, whatever portion you put into stocks, why not just purchase SPY (or another equivalent index fund)? I don't think I will ever purchase an individual stock again. I am curious why others don't follow this method.
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Old 02-21-2013, 07:37 PM   #2
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I spent my whole life investing in various stocks, thinking I was smarter than the others and could outperform the market. I did ok, but some of the success could have just been luck. I now only trade in stock indexes, as I hated the insider information and manipulation that would occur with individual stocks. I don't believe that is possible with a large index fund such as SPY. So in your AA, whatever portion you put into stocks, why not just purchase SPY (or another equivalent index fund)? I don't think I will ever purchase an individual stock again. I am curious why others don't follow this method.
Yours may be a very controversial post. Very few people here are index investors, mostly we do options and commodities.

Ha
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Old 02-21-2013, 07:41 PM   #3
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As an Indexer I hope more people continue to try to beat the market. Being average is great for me in this case.
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Old 02-21-2013, 07:51 PM   #4
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Perhaps. But I do enjoy the thrill of investing in individual stocks as well. I go for only blue chips though. 50% in indexed, the other half in hand picked stock
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Old 02-21-2013, 08:18 PM   #5
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I pick individual stocks and I would be better off with the S&P 500...but i do it for the thrill...it's my form of gambling because though I know the house always win.
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Old 02-21-2013, 08:30 PM   #6
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I think index funds play a major part in portfolio planning. I think actively managed funds and or individual security selection do as well. So, I'm firmly on both sides of the fence. Core is index funds.
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Old 02-21-2013, 08:33 PM   #7
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The only controversy here should be whether the S&P500 is a broad enough index.
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Old 02-21-2013, 08:36 PM   #8
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I spent my whole life investing in various stocks, thinking I was smarter than the others and could outperform the market. I did ok, but some of the success could have just been luck. I now only trade in stock indexes, as I hated the insider information and manipulation that would occur with individual stocks. I don't believe that is possible with a large index fund such as SPY. So in your AA, whatever portion you put into stocks, why not just purchase SPY (or another equivalent index fund)? I don't think I will ever purchase an individual stock again. I am curious why others don't follow this method.
Whatever you're doing now, well..... that's what you're doing. Enjoy!
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Old 02-21-2013, 11:17 PM   #9
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thinking I was smarter than the others and could outperform the market.
Who thinks they are "dumber" than other investors?
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Old 02-22-2013, 07:47 AM   #10
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Very few people here are index investors, mostly we do options and commodities.
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Old 02-22-2013, 09:54 AM   #11
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[SARCASM]Yours may be a very controversial post. Very few people here are index investors, mostly we do options and commodities.[/SARCASM]

Ha
FIFY (he/she is a newbie...)
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Old 02-22-2013, 10:09 AM   #12
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Indexing is fine, but look much wider than SPY. Value, small, international, EM are good too.
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Old 02-22-2013, 10:14 AM   #13
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I found I made more money picking the correct AA, than I did picking stocks.
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Old 02-22-2013, 10:48 AM   #14
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I dunno. After all is said and done, my carefully chosen/monitored set of stocks and AA pretty much runs in line with the indexes, with a little bond mitigation thrown in.
Which is pretty much the observation of the OP.
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Old 02-22-2013, 10:59 AM   #15
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Your stock may match index funds today, but try to do it for 30 years. Even Peter Lynch gave up. Follow a LazyTraders slice and dice 6 fund portfolio and you will sleep well, stop watching the market, and beat most every stock picker out there. However to the OP's question, SPY is a fairly narrow index fund, mostly just US large cap, instead use a very low cost Total stock market, Total International, Emerging Markets, Total Bond, Small Cap and an FTSE all World except US. That gives you diversification. Maybe add some TIPS for inflation protection.
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Old 02-22-2013, 11:06 AM   #16
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+1
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Old 02-22-2013, 11:22 AM   #17
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Thanks for your replies (I appreciate the humorous ones too). What I got out of the replies is that some still like the thrill (individual stocks are more of a crapshoot), which I admit I will miss. But I am not trying to make a nest egg (I am done) but rather get a reasonable return and avoid having to follow individual stocks. It seems to me there would be more commission expense, but with discount brokers that is not a significant issue.

I do agree I should diversify more, SPY was just a general example of an index fund. I really just want to invest in a few index funds to diversify, and then just rebalance once a year.
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Old 02-22-2013, 11:39 AM   #18
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I do agree I should diversify more, SPY was just a general example of an index fund. I really just want to invest in a few index funds to diversify, and then just rebalance once a year.
Google "three fund portfolio".
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Old 02-22-2013, 01:44 PM   #19
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Who thinks they are "dumber" than other investors?
Based on my past, I couldn't look myself in the mirror, if I didn't admit I am dumber. But since, I did a better job saving this past year than I had planned, I allowed myself the opportunity to fail again and invest/gamble10k in a stock. Bought 200 shares of Intel, last week and it promptly went down 75 cents. Bought another 200 at session low yesterday, and now I am back to even almost already. Maybe I can figure out away to buy this stock all the way down to zero and still break even. My "serious money" is in IBonds, CDs, Total Market, and STAR.
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Old 02-22-2013, 08:40 PM   #20
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Yours may be a very controversial post. Very few people here are index investors, mostly we do options and commodities.

Ha
Awww! Now I gotta get all this coffee off the keyboard and out of my sinuses.


I know I'm a dumb investor. Lazy, too. I just set up an asset allocation between stock funds and bond funds (55%/45%) Then I guessed at a weighting between the total US market, and total international market (70%/30%). For bonds, I just went with an intermediate term US fund, and a Treasury Inflation Protected Securities fund, split 50/50.

Once a year I check to see if things have gotten too far out of whack (pick a number, e.g. more than +- 25% from where I want them), and rebalance if needed. I did that last week, first time since the Great Rebalance of 2009. The rest of the time I can play with the cats, tinker with cars or radios, or annoy people on the Internet.
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