[jmeyer2k]

It depends on the time-frame you plan to invest. If it's a short time frame, investing in individual stocks can be OK.

There's just so many variables that go into the price that something that causes the stock to go up/down 20% can be completely unforeseen.

A broad market index won't have these weird fluctuations. Almost every single market strategy underperforms broad market indices in the long run.

Even hedge funds that outperform the S&P in one period perform average in the next period. In other words, past performance of funds has no impact on future performance. On average hedge funds picking individual stocks consistently underperform compared to broad market indices.

[tempsy]

The issue I have with your statement is not that you're guaranteed in any way to beat the market, but saying that investing in individual stocks is gambling. It just isn't true.

Again, if you have no more than 5% of your portfolio in an individual stock then a 20% drawdown on that one stock is not going to significantly hurt you.

People should feel free to decide for themselves if they want to spend the time to actively invest vs throwing everything into an ETF and no one should be shaming them into thinking it's akin to going to a roulette table in Vegas.

As someone in tech, I've done quite well investing in high quality tech companies like Apple, Netflix, Amazon, and Nvidia over the years. I keep my 401K in a broad index fund but enjoy actively investing a part of my wealth.

[jldugger]

> As someone in tech, I've done quite well investing in high quality tech companies like Apple, Netflix, Amazon, and Nvidia over the years.

I feel like I have a number of coworkers who make investments like this, that haven't really been burnt on this because of the bull market. And because they know tech better than most, that's what they focus on, and it becomes a huge sector risk, even though no more than 5 percent is invested in any particular symbol. If five years from now we learn that someone in big tech has been cooking the books (https://en.wikipedia.org/wiki/MCI_Inc.#Accounting_scandals) that could lead to a sector wide dip for a variety of reasons, far worse than a 5 percent drop.

What it comes down to for individual investors is that diversification is at odds with well researched investing. You just don't have the time to pour over 100 quarterly 10-Qs, build sales forecasts, or predict next year's return on the 10y treasury bond. It can be a fascinating hobby, and while I have a small trading account with the IEM, all my real money goes into VOO/AGG.

[tempsy]

I don’t take investing so seriously like pouring over financial statements outside of skimming through earnings reports. I don’t live everyday worrying Tim Cook is committing massive accounting fraud. I invest in companies I understand, use/like, and reasonably trust, and it’s worked out well for me. There may come a time the whole market crashes again, but my gains are far above the index fund over the last 10 years, and if I need to derisk I will make that decision at a later time.

Again, I just thinking screaming “anything except index funds is stupid gambling and irresponsible” is untrue. I also think those who become truly wealthy in life necessarily have to do things that the average person is unwilling to do, like invest understanding there’s a risk involved.

[jldugger]

> I don’t take investing so seriously

Then how do you know you aren't over paying for stocks? Your plan is to buy high and sell higher?

> it’s worked out well for me

My unvested RSUs have more than doubled in value over the past year, and ESPP has done just as well lately. The market has worked out great for everyone, especially those of us in high tech.

> if I need to derisk I will make that decision at a later time.

To me this reads as 'I will sell when the market drops hard enough to make me anxious.' A ton of institutional investors (think pension funds and university endowments) did exactly that, and it made them worse off in the long run. David Swensen calls that institutional strategy out as 'buy high and sell low.' IMO, buying into a down market is the real step the average person is unwilling to do, even though it's incredibly easy implement: sell off your winners and buy more of your losers.

If you have something more complicated in mind, I just am not ready to believe someone unwilling to bother calculating the present value of forecasted future earnings is bothering with looking at their Sharpe ratio and deciding 'welp, time to buy some VIX to offset this risk.'

> Again, I just thinking screaming “anything except index funds is stupid gambling and irresponsible” is untrue.

Even if you don't accept the premise (I don't[1]), doesn't mean active investors are a priori smart. I have yet to speak with anyone upset by the index investing philosophy I consider prepared.

[1]: There are clearly people who make a living doing this who dig far beyond financial statements. Random example I know of from a lecture given at Yale by a trader (https://www.youtube.com/watch?v=DMbhgSBIUfk&t=3875s if you can stomach the umms and ahs) reading Bond contracts ("indentures") and looking for companies that were likely to delay financial statements and owed bondholders par immediately. One such notable source of delayed financials was backdated options, and this exact accounting irregularities even affected the tech giant you mentioned, back in 2007. You may recall another facet of this story from HN favorite 'Why I did not go to jail' (https://a16z.com/2014/02/06/why-i-did-not-go-to-jail/) as this was widely practiced at the time.

[tempsy]

If you have income and you're young, you can afford to take risks. Big tech is disproportionately represented in SPY/QQQ so if we're in a massive bubble it's all going down anyway.

I consider active investing to be a hobby. I get a kick out of seeing earnings reports come in from companies I'm invested in. Again, I've dramatically outperformed SPY over 10 years and the gains have nearly secured my retirement as someone in his early 30s.

I occasionally hedge with SPY puts or gold calls if I think we are in an actual correction. If it's sustained I would do that over selling.

[monksy]

> it's a short time frame, investing in individual stocks can be OK.

And then your gains are cut by transaction costs, opportunity costs and short term gains.