Many years ago I gave up trying to pick winners and losers in the stock market. I decided to be the market, instead of trying to beat the market.
When we look a bit closer at a regular stock market index like the S&P 500, we discover that there are many losers, a whole bunch of mediocre companies, an a few winners.
Take for example the past 12 month. The darlings of the stock market, the technology sector, has been the biggest loser, with well known companies like Meta tumbling almost 70%, and other heavy hitters like Microsoft, Google, Disney, etc., enduring declines between 30% to 50%. Who would have thought? They were the champions of the COVID era. Not any more.
And then an industry that we would like to think it’s dying, the oil industry, soaring with amazing gains. Companies like Exxon sky rocketing to the moon with an increase of over 75% for the past 12 months.
Sure, no one could have predicted the war with Ukraine, and no one could have predicted COVID, and no one will be able to predict the next global upheaval. And that’s exactly the point. No one can predict anything consistently. Sure, there will be some lucky person who by chance will predict the next new thing, but keep in mind that 80% financial experts don’t beat the market.
The best way to make sure you have the next winner is by having all the stocks in the stock market, and you can have all the stocks in the stock market simply by owning the index.
By buying the index, you get the benefit of diversification with just one purchase and you save yourself from the stress of having to follow hundreds of individual stocks.
I can tell you one thing. I already have the next big winner, and you can too, simply by owning the index.
Previous stock market posts
- Paul Allen Record-breaking $1.5bn art sale underperformed the market
- Why having bonds in your portfolio is dumb
- Bitcoin is plummeting fast. It is and always was a big scam