My individual picks are up nearly 4% YTD while index funds are down.

VTI is down 7% YTD. QQQ is down 12%. My portfolio of individual picks is up 3.85%.

I just want to put this here as an “I told you so” to the people who told me this was stupid, and also as a learning piece for people who are just starting out and trying to sort through the noise (there's a lot of it).

Long-term, if you're making regular contributions to VTI, I'm not really into a position to criticize that. History has proven it works. But as Jeremy Grantham says, there's been numerous times in history, too, where you've had to wait 10, 20, or 30 years just to break even (there's a great interview of him on YouTube with Bloomberg, this sub won't let me link it). Furthermore, part of the reason we've recovered so easily from crashes in the last couple of decades is because central banks keep jacking down interest rates further and further. How much lower can we go?

I understand that this a long-term game, and we're not even 2 months into the year yet. But given the uncertainty around monetary policy right now, and cheap money coming to an end, I think it's reasonable to expect that indexes will continue to underperform. Perhaps after an amazing liquidity-fueled bull run of a decade and a half, last year was NOT the time to dump your money into a market-tracking index fund.

Like many people here, last year was my first year investing seriously. What I put into the market last year represented a very large lump sum to me, and one that I may never replicate again in my life. I could not afford to dump it into an index fund at all-time highs only to have it tank immediately. For that reason I looked for strong companies trading at discounts or reasonable valuations, as well as companies that paid reliable dividends. I chose a conservative approach that would almost guarantee consistent compounding in the coming years and decades. People told me that I was wrong and downvoted me, yet here we are in February 2022 and my portfolio is overperforming while the market struggles.

I think the advice of index funds is great when you have people buying hype companies, companies with no earnings, or for general clueless beginners who get themselves into trouble because they don't know what they're doing. But I think the mantra of “just put it in VTI” has become a bit brainless, and even with VTI, there's no such thing as a free lunch. You have to know what you're doing, and an index fund is no substitute for investing knowledge.


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