Despite warnings that stock picking doesn't work (in /r/stocks, mind you, not even /r/bogleheads), I decided that the indices were overvalued when I started investing last year. Fed policy was unprecedented and I understood that this has a pumping effect on asset prices. Therefore, I decided to avoid index funds for the time being and focus instead on a low-beta dividend portfolio.
As I posted yesterday, my portfolio has returned 5.5% since I started on Feb. 1, 2021, compared to 6.8% for VTI. Not bad at all. But I didn't receive a single comment saying “hey, nice job, that's a pretty good return for a conservative portfolio”. Instead, I received comments blasting me for how stupid I am for underperforming the index, among other things.
Meanwhile, when someone YOLOs their money into ARKK and loses their life savings and decides “VTI and chill from here on out!”, we upvote their post to the front page and slather it with awards. Everybody loves a good repentance story, I guess.
But really, it doesn't make sense. My theory is that there's a psychological benefit to “VTI and chill”. There's some sort of psychological comfort in thinking “if I just do this, nothing can go wrong, and there's absolutely no other sensible alternatives”. It takes the responsibility off of you. That's kind of the point, right? But it doesn't mean that you don't have other options. And it doesn't mean that index funds don't come with their own risks.
I think it's a shame that in a sub called /r/stocks we bash people for picking their own stocks, and even more so when those people are moderately successful. The “haha I'm down 50% this year YOLO” comments that we upvote are funny, but I think we can do better.
Leave a Reply