That’s the point. Most investors are served perfectly fine by an index fund and functional broker. That’s it.
Active trading and expensive funds are your enemy as an unsophisticated investor. VTI or ITOT and chill, and as long as you have income, discipline, and an emergency fund you’ll do better than most.
My point is that ETFs by definition are a group of stocks, often grouped by sector unless talking about a whole-market ETF.
For example you could have invested in SPY, or QQQ, or IWM at the bottom of the bear market in 2008, and walked away with vastly different returns on Dec 31, 2021. Those are all indexes. Even from 2020 onwards, if you had picked XLE you would have had different returns till date than if you invested in XLU or some green energy ETF, or even 2020's darling, ARKK.
Just saying invest in an ETF doesn't mean anything. They are baskets of stocks, and as the macro environment changes, some ETFs will perform better than others. In effect, even an all-encompassing ETF (VTI?) will only perform well in a bull market. Just because we've been in a decades-long bull market doesn't mean stocks will keep going up forever.
Is the answer stock picking? Absolutely not. However, ETFs are not the "practically risk-free return" they are sometimes billed as.
Entry and exit points are material, but you don’t know when to enter and exit to maximize profit, hence “time in the market beats timing the market.” On average, you should come out ahead (based on available data and back testing).
These are well worn passive capital market investment principles, with copious amounts of supporting data. As an individual, it is very difficult to do better than long duration broad equities basket exposure with a low expense ratio.
"Exposure to stocks" is not the problem. Thinking you know which stocks to pick is the problem. Robots and random chance are better than human intuition, partly because of institutional manipulation of markets.
I disagree with the proposition that it is impossible to pick good companies. Anyone with half a brain could have invested in AMD as Zen 1 and Zen 2 came out, and the writing was on the wall for Intel. Same goes for other industries, if you are willing to do your homework and manage your risk.
It's easy to invest in a single stock that goes up in the longest bull market in US history.
It is much harder to beat the market, especially in a bear market.
The core tenet of investing is that you make a bet that other people see as risky. We have enormous amounts of research that active investing at an individual level can no longer beat the market in the face of widespread insider trading at the investor level, HFT, etc.
You need asymmetrical information to beat the market, and individuals just can't get it.
> It is much harder to beat the market, especially in a bear market.
This is the crux of the Warren Buffet vs Hedge Fund bet, and why it failed. Buffet quite possibly realized that a new bull market was about to begin, and the market would beat a hedge fund. When the bull market ends though, let's see if hedge funds don't start beating the market with their long-short-cash strategy.
I am nowhere near hedge fund territory, but do have some qualms about whether this bull market will just grow to the sky or have a big reset sometime quite soon, quite possibly reaching 6000 on the S&P before that.
Also, I find the efficient market hypothesis quite bullshit, so there's that.
The companies and corporations that sell investment vehicles and services try to "make it cool/funny" to not understand money and that "rich people have their wealth managed for them", a bunch of bologne!
That being said, it's not simple, and people need to be serious about investing, it's very easy to get burned without the proper education/patience
Active trading and expensive funds are your enemy as an unsophisticated investor. VTI or ITOT and chill, and as long as you have income, discipline, and an emergency fund you’ll do better than most.
https://longnow.org/ideas/02018/02/09/warren-buffett-wins-mi...
https://longbets.org/362/
https://www.npr.org/sections/alltechconsidered/2016/01/08/46...
https://media.npr.org/assets/img/2016/01/07/index-67f786d0f1... (“Never buy or sell an individual security; the person on the other side of the table knows more than you do about that stuff.”)