In early 2020, at age 21, I started to invest in the stock market by picking single stocks that I analysed through thorough due diligence (mostly fundamental). During that time I just finished my bachelors degree in International Business and now I am on the verge of finishing my masters degree in Finance & Banking. Since I was 15-16 years old I always had an interest in the stock market and finance topics in general. Also I always considered myself to be really good with mathematical and statistical concepts, so all in all I thought that I must have an edge on the „regular“ investor in terms of not necessarily being better of just putting my money into index funds.
Now after 4 years of investing I realised that I was wrong and the typical advice to just invest into an s&p500 or world etf applies to me as well. Over the 4 years I can account for returns around 22% on my portfolio (not per year but over the whole time span), massively underperforming S&P return during the same timespan. So, on the first of January I started to reallocate my funds by investment a fixed amount into an vanguard s&p500 and all world etf bi-monthly and I couldn’t be happier with my decision.
Half a year into implementing the strategy shift, I already accumulated a 4-5% return on those etfs and didn’t stress a bit along the way. No reading financial statements and listening to earnings calls for hours. No spreadsheet nightmares, no waking up and checking the market every hour till I go to sleep.
So yeah I know, what I realised is what everybody keeps preaching since the early days of investing but I had to experience it myself and get humbled to know for myself. Even though I have the knowledge when it comes to finance, mathematics, statistics etc. it seems like this is just the barrier to entry. From that point onwards buying and selling single stocks is 90% and mental game as well as some necessary luck. So a lot of the times I picked the right stocks but failed to stick to simple investment rules, and human biases got the better of me. I kept stocks that underperformed in hopes of getting back in the green And sold of stocks I believed in just to realise gains (e.g. selling Nvidia at 160 bc I already doubled the initial investment)
I hope someone reading this may benefit from hearing my investment history and reflects on if picking single stocks is really worth it
EDIT:
It’s crazy how one single post which is just summarising my personal experience got the people of this sub visibly divided into 2 camps:
The first consisting of people who agree and/or congratulate me to my personal realisation. The second being people who feel the need to flame me for my experience, decisions, educational background etc.
So just to make it clear:
NO, I’m not thinking that I know a lot about stock market mechanisms! In fact, over the past 4
Years I gradually became more and more aware of the fact that, for me, learning all about it is not worth it.
NO, I wasn’t trying to generalise or say that picking stocks is a bad choice no matter the person.
YES, I was just talking about myself, and the fact the I, as a person, am prone to human biases and that psychological errors led me to screw up good investments
YES, I believe there are tons of people who are capable of beating the market, it’s just not for everyone
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