[Ambele]

Sometimes learning experiences are worth as much as the money. Also, it's easier to panic sell index funds you aren't attached to than individual stocks you're emotionally attached to. How do you perform a valuation on an index fund like you can with a stock?

To paraphrase Warren Buffett's investment advice, if you have a high IQ, donate the extra points to someone else because what you need more is a strong stomach (for gut-wrenching volatility).

[kelnos]

> it's easier to panic sell index funds you aren't attached to than individual stocks you're emotionally attached to.

If emotions are a part of your decision, you've already lost the game. I get that humans are emotional creatures, but if you start making investment decisions based on panic and emotions, it doesn't matter if you've been buying index funds or individual stocks; you're going to perform poorly and likely lose some money either way.

[Ambele]

> If emotions are a part of your decision, you're going to perform poorly.

I agree. Hacker News readers are more logic based but the rest of the world is more emotional based. For most people, the emotional half of the brain dominates the logical half of the brain. I think we can agree that being invested in a diverse basket of 20+ stocks with 5% or less of the portfolio invested in each is regarded as a pretty safe bet. I also think we can agree that anyone who invests will do better in the long run than people who don't invest.

The news commonly sells convincing chichen-little fear that the sky is falling, the market's gonna crash, and we should all flock to gold. But I know with higher certainty that Amazon will keep shipping packages, Target will keep selling merchandise, Apple will keep selling more iPhones, and VISA cards will keep collecting interchange fees.

We can debate though whether it's better to hold an index fund you might panic sell or individual stocks that you plan to hold forever.

[PhantomGremlin]

Target will keep selling merchandise, Apple will keep selling more iPhones

Once upon a time Sears, Roebuck and Company was the country's largest retailer. Much more recently, Motorola and Blackberry sold millions of phones and Apple didn't.

individual stocks that you plan to hold forever.

Once upon a time people thought you could own the Nifty Fifty[1] stocks forever. You would probably have been better off putting your money in an index fund. E.g. what's a recent price quote on Eastman Kodak?

[1] https://en.wikipedia.org/wiki/Nifty_Fifty

[FrozenTuna]

Ummm, I just looked at that list. If you spread out an investment over those companies... I'm pretty sure you're doing damn well despite obviously having a few under performers. Since 1970, Disney grew 3500% faster than inflation. Walmart grew 2000% faster than inflation. Even with the companies that went to 0, there are some insanely good buys in that list if the year was 1970.

[Ambele]

People focus on the investment losses more because a loss is more than twice as negative to them as a gain is positive. You can gain an edge on the market if you view gains and losses for exactly what they are. The beautiful part about investing is that the downside is limited (because a stock can't go below 0) but the upside is unlimited.

The multi-baggers in the portfolio such as: 4x gains in Netflix, 4x gains in Amazon, 3x gains in Microsoft, and 11x gains in Shopify over the last 5 years will have outweighed GE dropping 50%, GM dropping 1x*, Seers dropping 1x, and Kodak dropping 85%.

I'm not as familiar with the Nifty 50 probably because I'm younger. Investopedia says it was the popular large-cap NYSE stocks of the 1960s and 1970s without an official list. but could also mean one of at least 6 indexes on the indian stock exchange[2]. Gurufocus claims they were Large Cap Growth Stocks with an average P/E Ratio of 42x.[3] Large caps are known to underperform overall in the long run but outperform more frequently in shorter 1 year time frames.[1] The same is true with growth stocks vs value stocks.

It seems to me that the reason the Nifty 50 "lost 80% to 90%" [3] is because it was overweight in large cap and growth stocks while neglecting value stocks and small cap stocks.[1] This is evidenced by the S&P 500 growing 6.78% per year annualized from 1960 to 1979 and showing a positive return over every 15 year period in recorded stock market history.[4]

[1] http://www.moneychimp.com/articles/index_funds/why_sv.htm

[2] https://www.investopedia.com/ask/answers/08/nifty-fifty-50.a...

[3] https://www.gurufocus.com/news/594692/faang-plus-m-and-the-s...

[4] http://www.moneychimp.com/features/market_cagr.htm