And now you know why the unmanaged market indexes outperform 85% of individual investors and 75% of managed funds.

Do yourself a favor and look up "index investing."

You and I and everyone else in this thread are irrelevant. It's not about brains or integrity or feelings or friendship or wisdom or knowledge.

It's all about STATISTICS.

For my entire adult lifetime, I have listened to people endlessly explain what stocks to pick and their reasoning behind it. It always sounds reasonable. Sell this stock and buy that stock because of this and that. Oil prices are up, agricultural prices are down, blah blah blah.

But STATISTICALLY, it is a FACT that if you buy a low-cost S&P 500 index fund from Vanguard and just let your money sit there through thick and thin, your returns will outperform 85% of individual investors and 75% of professionally managed portfolios.

The 500 index is a brisk performer. And it doesn't make human errors. And it's extremely low cost.

Here's a great example:

Back in 2019 went to my tax accountant to do get my taxes done, and I asked the accountant, who is also a financial advisor with college degrees in finance and accounting, what he thought of the stock market.

He's a chatty guy and he told me that he advised all of his clients to get out of the market for the year, the market is overheated, blah blah blah.

For a minute I got sucked in and made plans to pull everything out. But then I said to myself, "NOPE. NOPE. NOPE. DO YOU BELIEVE IN STATISTICS OR DON'T YOU?"

I did the STATISTICAL thing and left my money in my Vanguard S&P 500 index fund and I made a big fat pile of money in 2019.

"The S&P 500 Price index returned 30.43% in 2019. Using a better calculation including dividend reinvestment, the S&P 500 returned 33.07%." My accountant advised his customers to miss out on one of the most incredible years in the history of the stock market.

This was a human error. My accountant got nervous and tried to TIME THE MARKET. Trying to time the market is statistically an error.

When it comes to people's stock advice in threads like this, it's ENDLESS and EVERYONE thinks that he has great magical wisdom.

Just look at this thread. 300+ pages of people talking about gas prices and agriculture and apple and tesla like they have a crystal ball. It never ends.

Back in 2008 or so, the stock market tanked. Every website you can name had 1000s and 1000s of people advising that the end of the world was nigh and YOU SHOULD TAKE YOUR MONEY OUT OF THE MARKET AND BUY GOOOOOOOOOOOOOOOLD.

GOLD IS YOUR SAVIOR IN THIS TIME OF DOOMSDAY! It all made perfect sense. Buy gold at $1900 an ounce so you can survive the coming zombie apocalypse.

I ignored this wise, sage, magical advice and did what I always do: put my money into my good old S&P 500 index fund. For the next ten years, my money doubled and tripled and quadrupled while gold flatlined.

Here's the best part:

Every single time that I tell people that I'm an index investor, and why, they sort of sneer at me and say, "Well, if you don't have any risk tolerance and you're OK with mediocrity, then I guess that's fine for you."

Out of the 1000 people who have said that to me, my returns in the stock market beat 850 of them. If that's "mediocrity", then I'll gladly take it.

AND, when I ask people what their annualized returns are, they refuse to tell me. Because 85% of them can't beat the index.

As I approach retirement and my risk tolerance changes, I'll use one of the vanguard target retirement index funds that has stocks and bond indexes. And I'll continue to beat 85% of my peer group.

Math is your friend. What I outlined above is LOGICALLY SOUND but BORING. People don't want to make 8% annualized returns. They want to make 6% while they are chasing 500%. That's why people reject index investing.

One more thing: gambling is addictive to the human mind. RANDOM rewards are IRRESISTABLE to the human brain. You know how they get the killer whales to jump way out of the water? They vary the size of the bait. Usually the bait is a tiny fish. But every so often, it's a HUGE fish. And the killer whales get addicted to the RANDOM reward. People make a big hit in the market and they'll spend the rest of their life chasing down that moment of glory. Because of how mammal brains are wired.

Do they, though? I think a lot of people index invest as a default, because they have a 401k at work and they don't know what else to do. They look at the mutual funds that their company offers and pick the 500 fund because it has the best numbers.

Most of the people I know who invest actively in the market are not index investors. Especially the financial people I know, they all pick their own stocks.

I do some gambling. I invest some "disposable" money in crypto, which I regard in general to be a big fat joke. But it makes people rich. For now.

You just have to jazz up the indexing story a little bit.

Like this:

"Hey guys! I was making a bank transfer to my index fund and the doorbell rang. I opened the door and Scarlett Johannsen walked in and gave me a lap dance!! Wooooo!"

See? Admit that the indexing story sucked you in there.

Maybe I'm being a knucklehead, but these kind of threads are always so full of emphatic speculation and so full of "toxic positivity" that they leave the impression that the respondents don't know much about investing.

When you see 5 people wrangling back and forth for 10 pages about how the price of baby formula will cause Schmesla to quadruple in price, do you walk away with the feeling that they have a real firm grasp on investing?

Maybe you had to be around for 2008 when every single person on earth said to sell all your stocks and buy gold. That would have tended to eradicate your faith in the average investor.

Everyone had this unshakable notion that gold would buy them penicillin in Defcon-4-Land. I saw a thread about gold buying, and I posted up that if the economy got so bad that the corporate factory farming system broke down, we would all starve in a month or so. So gold wouldn't help you buy anything, because there would be nothing to buy.

People DID NOT like that idea and got VERY ANGRY. Pennsylvania produces 10.3 billion pounds of milk annually, and if there is even a snowstorm the stores run out of milk in an hour. But these people were all convinced that gold, a lump of useless metal, would make them the king of Doomsdayland.

(If you want to stock up for doomsday, I recommend military grade 9mm and 223 ammunition. It never spoils and would be a good thing to trade with.)

Gold is useful only as a medium of exchange. So it's usefulness is proportional to how much the free market place exists.

If we were in the worst case Defcon-4-land, where the living envy the dead and all that, 99% of people would starve in a month. Unfarmed land produces almost no "human food." Factory farming produces HUGE amounts of food. Do the math.

You know how long a deer will feed a grown man who hunts all day? About 12 days. Even the big deer up north. There is not enough wild game to keep people alive.

In the event of a doomsday scenario, people would trade in the remaining stocks of food and medicine and they would need guns and bullets to keep it.

The Donner Party probably had lots of gold coins, but they ended up eating each other anyway.

That's my 2 cents on it.

How good of an investment that gold is, is another riddle. I have no freaking clue. I never had a feel for it. It could do great or it could tank. It's not very appealing to me at $1800 an ounce.

I come off real snotty in this thread so far.

LOL

That's because I'm being lazy. Whenever you are critical of anything, you tend to come off as a negative, critical person.

So you have to couch your opinion very gently, like sandwich the negative stuff in between chunks of praise.

That's what the book, "how to win friends and influence people" is mostly about, in case you never read it. How to be adverse with people without offending them or turning it into an ego battle.

FWIW, I don't mean to be critical of anyone. Just a big big fan of indexing.

I'm an engineer, and stock picking is a big topic of conversation among engineers. I can tell you this for sure: being good at solving physics problems doesn't help people pick stocks. But they are certain that it does.