People aren't lazy. They're busy working and taking care of things like children. If your job is the stock business, then yes, you shouldn't invest in mutual funds.
@@TimeIdle People are lazy as hell !! I've told people that if they read five or six books on the stock market they will be able to blow away the averages. Everyone I've ever told that has said they wouldn't be willing to read that much.
My strategy: - start with S&P500 ETF as it is pretty fool proof for any starter if you have the patience to not touch them - through the years find stocks that you understand and buy them too - get your portfolio in a 65% ETF/ 35% stocks balance - hold
Most people seek instant gratification, which usually doesn't go well. so set goals 1-2 years out instead months out, and you are likely to be much more satisfied with the results.
Actually if you do research, your goals for investing should be more like 5+ years out. Data actually shows that results are much less predictable even a year or two after investment. If you make good decisions consistently and buy at good valuations, the results start showing correlations after 5+ years, and begin to get very consistent after 10+ years. If you choose a wonderful, highly profitable business to invest in, it is highly likely to outperform the S&P500 after 10 years. The problem being most people won't know if they are good at picking stocks or not for at least 5+ years...
I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?
Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge
Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.
There are a lot of independent advisors you might look into. But i work with Christine Jane Mclean and I have been working together for nearly four years, and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
There are many reasons hedge fund managers don't beat the market. Reasons: (1) -- Career Risk, (2) - Continuously accepting new money into the portfolio, (3) - Trying to generally match the S&P 500 every single year so investors won't pull their money from the fund, (4) -- based on #3 -- FEES. All they care about is getting their annual fees. I encourage you to read the Intelligent Investor -- there is a good chapter that explains the why behind why money managers don't outperform the market (80%ish of them)
Love this. I'm relatively new to investing, but the common 'wisdom' of diversification always struck me as a great way to tread water. For the few good stocks you hold, the rest drag you back. In my initial tests, diversification always ended in a short term net loss, while taking the time, studying fundamentals and making deep, calculated investments has resulted in the big strategic wins. It's certainly "to each their own", and some just want to hold SP500 for 20 years, and that's totally fine. But I want to read the public sentiment, study the fundamentals, track the trends and then lay my bet to test my knowledge of the world around me. That's half the fun.
I'd add that it's really not as easy as finding the "Perfect business" and ranking them. You'll have one with strong and consistent sales growth but poorer FCF growth, and one with less consistent sales growth but better FCF growth for example and at that moment in time they might be your two best options, now enlarge that a bit, all 10 of your options may be like this, or all 30, because there isn't one single company with the perfect balance sheet or we'd all be invested in it.
He didn't necessarily know all of them in depth - he had a theory that to get to know a stock you had to own it. He'd buy a lot of little positions in a lot of companies he had a passing interest to help him keep track of some of the more interesting ones. This isn't the same as diversification.
Small investors like us cannot follow the method of the billionaires. They have insider information and direct influence on the company they invest in.
Small investors are not beholden to share holders, though -- you can take far more risks without being fired. Funds like Berkshire Hathaway are designed to preserve wealth more so than to rapidly increase it.
When it comes to investment, diversification is key. That is why I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech and Health.
The market is so volatile now to be depending on bull run to make profit,I advice everyone to trade now with a working program with like that of Kathy Genelle Britton so far she is helping me find investment that has significant growth potential.
I’ll take investments in stock any day they’re very remunerative only problem I’m having is I really don’t know how to go about it,I do get lost and overwhelmed by the markets. Any solid pointers in reaching this trader would be helpful,I’d appreciate if I got a reply
Interesting I'm also a subscriber of Kathy’s signals and if I were to rate her accuracy, I would say perfect 👌, she has the best trading {ROI}.She is a regulated broker so she is very much accessible to the public, just search her full name online, check out her website for information concerning her services, then mail her for guidance.
Interestingly those are the sectors I began pulling out of at the beginning of the year---except for AVT and I just got back into GFS so I have a couple techs now.
Personally, I use a mixed approach. I have a small portion in ETFs, bonds, precious metals, and dividend yielding REITs. However, the bulk of my portfolio is in value stocks I love e.g. BABA. When the value stocks start tanking into an area of value, I can sell down my bonds, precious metals, or ETFs to raise cash. I sell put options on the individual stocks so I get paid for someone to force me to buy the stock. Every month, I just find something to passively invest into with a portion of my monthly income: bonds, ETFs, REITs, Gold etc.
Dude, I must say how by listening to pabrai you be like " I can so damn relate to him" With all your videos I feel that way, your videos are helping me out extremely
I’m ignorant and don’t know how to analyze businesses. I’ve learned I can’t beat the market, so I diversify, and the returns of an index fund are still really good.
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"There's no use diversifying into unknown companies just for the sake of diversity." Peter Lynch
I think there’s one additional layer- it depends on your intentions- for growth and active you have to be selective but for dividend investing it’s a bit different because you want a diverse array of stocks to create that income so if something happens that whole accumulation you’ve been doing doesn’t go in vain....
Thank you for the all the work you put into this channel, this is my favorite finance channels on YT. As someone new to investing these videos are a great way to learn. Including the live interview and then adding your commentary after is extremely helpful. Keep up the videos!
I try to balance my portfolio as much as possible by diversification. Thus I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech (5G companies, Isreali) etc. Also the health sector (Genome companies. Medical Marijuana).
Also important to note; do not just diversify by buying different dividend paying stocks, but also by ensuring that these are from different industries or sectors. In other words, do not invest all of your money into transportation stocks, or all of it into banking, etc. Diversifying across industries or sectors is the way to go.
To succeed in the financial markets, you must review and put into consideration, the dynamics of your trading asset prior to investing. Analysis Based on Research is Vital which is why; I recommend trading with a Professional if you don't know the basics.
@@qiuyueshu5459 To be honest I am no expert myself, I run all my stock related activities through my broker LORI LYNN GILE. Her stock picks never fail fail and she is always accurate with her projections.
@@johnpatrick5716 Lori Gile is an Elite trader by every means. Her strategies come from several years of trading experienced coupled meticulous research. She is one of the few Analyst dedicated to upholding a consistent record.
Buffett himself owns about 20 companies with his company, so really the world has changed since that time, we do have many wonderful business at this age in time.
Love your vids, been watching for just a little bit, but hear you talk often about diversification. but i'd love to hear you talk more specifics, like to also diversify within different sectors (like not have 90% of your portfolio in tech)
I would add two caveats: 1) Let's say you are already invested in 5 companies that you really like, but none of them currently come at an attractive price when you have money to invest. In that case it might be a good idea to add a 6th one. (Unless one of the first 5 is so highly valued that it makes sense to sell.) 2) If you are on the level off Buffet, Lynch & Pabrai, you may be confident enough in your three favourites. However, most of us are not quite there. The question is, is it more viable to analyse 3 companies like Buffet would or 10 companies with a still sufficient confidence level, all while you have a job/business that doesn't involve analysing stocks? I would say, 10 to 15 stocks are still okay for non-professionals (that is currently my personal comfort zone). If you have enough time and find enough opportunities, maybe 20.
Tell me how your average joe can even understand 1 business. Analysing 20 would be madness and just lead to speculation. If i was a new investor i would research 1 stock at a time until i find an undervalued and good business which i would probably buy and then research some more. If i found other great but overvalued businesses along the way i would keep them in mind if they suddenly become undervalued. Then after some time i would research some more and eventually look for more oppertunities. You never really have time to own 20 businesses
@@mikkelhansen3714 Well, if the average Joe doesn't understand one business (or doesn't habe time for it), they should go with index funds. If course you analyse them one at a time, it takes far less time to keep track of a business after that. The point is, you can still make good investments without spending as much time with each business as a professional would (otherwise we should all go with index funds and the discussion is pointless). But if you do so, you need higher diversification to make up for the lack of thoroughness (i.e. partial ignorance). There isn't a linear relationship between thoroughness and time spent though. So you can probably analyse and keep track of 10 businesses on average Joe level (while still having a job) in the time it would take to do just one at Buffet level (while not doing anything else). There is going to a sweet spot somewhere for everyone. It won't be 50 but it also doesn't have to be 3. The good thing is, if you only invest after you've done your homework, you will just reach the natural end of your capacity without descending into speculation.
Good snippets from these pro investors. I felt the re-explanation with stock footage was unnecessary however. It would have been good to include buffet later comments that top sp500 companies today were not even in the list 20yrs ago. And top business 20yrs ago are nowwhere near the top today. Also he now recommends his family to index after his death instead of holding a few businesses for 30yrs. So if you choose to own individual stocks you need to stay on top to mitigate concentration risk.
That is the essence of Buffet's philosophy. He says he only buys businesses he understands. So for the non-professional investor like me who is investing to protect his wealth and complement earnings in a 20/25 years horizon, there is nothing bad in investing in diversified index funds. Plus, even with ETF you can aim at specific sectors, while not having to pick who the winners will be in 10 years' time. I personally have around 30% of my portfolio in only 4 stocks. The remaining 70% is a handful ETFs and I am happy with that.
A good video for beginners. I guess most experienced investors would have similar position of owning fewer stocks which they know quite well. One more thing to add: stick to industries you are familiar with, the ones in which you have a natural inclination to read news, stories and happenings in that industry (even if you didn't invest any money). Do not invest in an industry or company if you cannot talk or discuss for 10 minutes on the industry, the company's history, products, markets, competitors, recent financial performance etc. Sometimes some diversification can be a good strategy. For example, while you want to stick to familiar good companies you may also think it's a good idea to put some money in some futuristic industries and companies you reckon have good potential five years down the line (e.g. renewable energy, hydrogen fuel, metaverse etc). A small part of your portfolio in a few such start ups is not a bad idea. If they didn't do well as you expected then you lose some money but if your prediction is right then you stand to gain a lot. So diversification is not bad by itself as long as you are clear on your strategy why you are in the stock market, what's your short, medium and long term expectations, what's your risk appetite etc etc.
The vast majority of mutual funds underperform the total stock market ETF. That is simply a fact. To think that you, a random individual investor, can outperform the majority of mutual funds is simply delusional.
Buffet, Munger, Lynch, and Dalio all have results that speak for themselves, but Pabrai and Bogle have dedicated their lives to helping the common man understand investing. I will respect everything the others say, but it’s those two I will obey. If whatever I’m doing doesn’t line up with Pabrai, I correct my course to match his.
Yeah Pabrai is a breath of fresh air. A lot of the others try to come across like big swinging dicks, whereas Pabrai seems down to earth and often answers the question without too much dramatic bs.
Good point about entrepreneurship, I had a boat dealership and was “all-in” for years without loosing sleep. Avoiding debt kept me calm through market crashes and economic turmoil
Really helpful video, as always. Another thing to add is that I think people have an idea that by diversifying they spread the risk of a company facing a significant challenge in its operations. The problem with that approach is that good businesses are less likely to face self-inflicted challenges, and are more likely to have the resilience to address externally inflicted challenges.
I'm currently holding 18, out of those I've identified 7 that really are adding nothing of real value to my portfolio, so I'll be divesting myself of them and getting down to the 11 great stories that make up the rest. Those 7 are in industries that I felt I should be in, just because I thought I needed to be in those industries. Realising now that it was unnecessary.
The point of investing in index funds is to not lose to the index. The point of stock picking should be to try and beat the index you're comparing your performance to. The global stock market is certain to go up with a long enough time horizon, so with index fund investing, you are sure to get that compound interest.
They can get bigger results because they can pick those businesses and take it to the level of meeting the CEO if they put billions in it. Your regular Joe can't do that otherwise everyone in the market would be rich.
Absolutely agree! E.g., I've diversified my mum's portfolio(which I handle, and wanna keep it low risk. 6 companies), and till date shows 41% returns in the past 6 months. My own portfolio, on the other hand has only 1 stock, my own chosen and understood business, and it shows 99.46% returns in the past 6 months! It made logical sense to me at that time, but after your video which includes these stalwarts of investing, seems like I wasn't being that stupid! Riskier, agreed, but sensibly risked.
@@TheYochillax well, it's 6 stocks, but I wouldn't exactly club those choices under "unsystematic risk" as I didn't just buy rif-raf companies. They're large cap companies(banks and FMCG sector) which move up at a snail's pace, and sometimes not at all. Only 2 of those 6 companies are small cap digital IT companies, which are doing the bulk of the lifting. Additionally, the number of companies you choose, to some extent, depend on the amount you have with you to invest as well... There's only so much you can buy with 11k USD. lol
@@andresm7029 thank you for your kind words! Well, you probably wouldn't know about the company as it's listed in the Indian stock market, exchange called NSE (National stock exchange). It's called happiest minds, an almost purely digital IT company. Wish you the best for your investing endeavours man, cheers!
great video.I have 8 stocks.4 growth stocks in my industry and 4 FAANG stocks.I now put money every month into 1 of the stocks to minimize trading costs.I actually select the one that has gone down the most as i believe all 8 have potential to go up.
Great content! To add: Markowitz (1952) proved 20 stocks, and then Graham (1968) refined and said 1-30 stocks maximium before it is similar to market return. With lower transaction fees recently up to 50 stocks can be held (Morningstar) but I think 20 stocks is still a good rule for maximum amount of different stocks in a portfolio. That being said, sometimes 'cash is king' in uncertainty and higher interest rate environment albeit inflation hurts, unless your cash is in USD which generally strengthens in turbulent times.
Why not both? I hold indexes from 3 different countries plus an emerging market etf. That's how I diversify. And I also pick stocks. But I only have a handful and I go in big when I find a good one.
Well, if cashflow is negative then so is the intrinsic value. So if you do a DCF calculation, the current year(s) will reduce the total value of the positive contributions in the future.
If you understand a business model on a very deep level you don't necessarily need to keep up with it everyday or even every quarter. If it has a big moat, great management, and a clean balance sheet you can just let it ride and check back in occasionally. And you can use that time to find even better businesses or maybe better valued opportunities.
Diversification is not against ignorance or because you are passive. It's against risk. While I agree with their sentiment, they all come from a place where they can afford to do low-yield and low-risk investments because they already own large amounts of capital. For most people, higher-risk investments are a necessity if we want to build some capital more quickly, in which case diversification makes a lot of sense. The approach being, if you lose, you lose small, but if you win, the winnings are bigger. It's not about ignorance. "Protection from ignorance" suggests that you are not doing enough. Whoever thinks that they know all that they should, have not been paying attention. There are always things you cannot predict. And "the market can remain irrational longer than you can remain solvent".
Only 3 months into investing. I'm 100% in Baba. I need 15 more shares at this discounted rate then I will then move to a 2nd position. I feel comfortable doing this because I personally don't see the need to break up the money I have every payday just to feel like I'm diversified.
@@sammywest9594 Take this advice -Get a broker so you don’t have to regret joining the market. Losses are inevitable but experts have the tendency to narrow that line and make more profits efficiently
It is quite interesting seeing how investors are joining the stock market. It is rewarding anyway don’t just get emotional as the results can be disheartening without the help of a professional
I have earn over €3k trading with Ryan Hans strategies. My love for the market is a result of the profits i make daily, it has been the best move i made this year. Passive income is key to building wealth
Love the channel. Big admirer of Buffett, Munger, Lu, Lynch, Pabrai, Town, Greenblatt, etc. I have a few individual stock holdings based on my understanding of how these greats value a business, but the majority of my assets (90%+) are in ETFs...mostly indexed. If I had more time, I'd probably invest more in stocks and less in ETFs. For the average person, indexing through an ETF is still the best bet. More individuals have accumulated wealth through indexing than any other investment vehicle (thank you Bogle). Even Buffett has instructed the trust for his wife to be 90% invested in an S&P500 index fund. Great conversation.
Are you investing in very broad Etfs or also some sector plays? I think in certain times, like last year, specific sector Etfs can be pretty nice, if you can't pick the 'best' company in a sector, like Energy or sth.
I think it is also a question of time, fun & effort you want to gift into investing. If you are happy buying 10 stocks and interested in their business, analyzing them, no problem there. If you are happy with buying one single ETF on ACWI or FTSE All World and focusing your remaining time on other hobbies than investing or higher income generation by learning for a better payment/own businesses/real estate etc., also fine. With both ways you get out with more money, compounding interest and happy time!
With one caveat: with stockpicking -in theory- you can lose ALL your money, especially if you own only ten stocks (most companies even only exist 10 -20 years!). With ALCW this will never happen.
Yes it will. but if you want to put in the time and effort you can achieve much more than 7% a year. look at buffet with 3x that every year for a lifetime. that coupled with compound interest and you go flying. but indexes are good for passive investors. problem is that inflation takes a third of that and so it is pretty mediocre unless you have a lot of money invested.
Have you done a video on analysing and finding for example 5 great business' or rather how to analyse and understand a company like Buffet talks about? I only look at motely fool and other stock talk but its not really analysis
I have many companies because I buy a moderate stake when bad things happen to good (not necessarily great) companies. I sell when the price returns to the correct valuation. If it's a great company, I keep them longer.
I am reletivly new to investing - bought me first share in 2019. I pumped my stocks to over £1.000,000 with TSLA SHOP and SQ. (unfortunaltly they all tanked in 2022) but if I had put the rest of my money into these three, instead of diversifying into some stock that lost me £1000s because of ignorence, I would have propebly pumped to £1,500.000. I have consolideted my loses in these small companies and bought more of my three winners
even as an active Investor you/we are still a passive in the business, means that we have no control over the company no matter how well we understand their business. so, imagine you put all your options on wirecard... obviously, it makes sense to go for best and second-best etc. if you are just an observer.
Wow, Thank you so much for this clip, I finally have a clear answer as to how I should start investing at the age of 50, having more time on my hands I will research reputable growth stock companies to keep at least 6 of them in my portfolio and keep topping them up instead of so much hype over index funds and etf’s that require 20 yrs plus for any substantial growth, cheers!
You could have all your money in microsoft and probably be fine. Bill Gates seems to be doing alright LOL. Most people in the Forbes 400 got rich off of one business…tesla, amazon, microsoft, walmart, etc. Charlie Munger only owns three stocks I think and he’s mega rich.
One thing we left out is value. One Stock might be attractive at one point in time, another Stock at another point in time. If you're buying individual stocks at different times, your portfolio could still end up quite large.
The problem with these debates is that we listen to a billionaire, for the average investor ETF index is the best initial investment until you have enough capital to invest in the markets. When you buy a share you do need to approach it at trying to find good busineses at fair price rather than trying to model on a buffet etc
Well you can’t go in just one stock because of timing. Your best stock may be a good at a certain time due to it being undervalued. While your 27th best stock may be at a better price point in the future when you have more money to invests. Another point is that extremely wealthy people have different asset allocations. Stocks may only be 20% of their entire portfolio while they invest in other asset classes. Their goal becomes more about wealth preservation than growth.
I think you can develop a fine "diworsified" portfolio by using a valued-based, buy-and-hold approach. To begin with, you might load up on your "best idea," but over time that stock will rise above your margin of safety price (for new purchases). So, you find a newer, currently-better idea. Repeat, a lot, over time. Doesn't Buffett's Berkshire Hathaway currently own about 40 stocks? Some, like KO, it's had for a long time (1988). AAPL was a 2016 purchase, and at the end of 2020 it bought (or added more?) VZ. BRK will sell when it feels the story has changed significantly (e.g., the airlines in 2020), but by holding stocks it has built up a "diworsified" portfolio. Is VZ currently its 40th best idea? No. They apparently thought VZ was a very good idea at the time of purchase. But they'll probably hold it until/unless they become convinced it doesn't have a good future outlook. Meanwhile, they have purchased, and will continue to purchase, other/new good ideas.
Unless you are retired and can follow stocks all you want. Accumulate always in your top five, but nothing is wrong with having a small amount in stocks that may pick up later. You do have to keep up your DD on all of them. I wonder if the one stock holders of Enron think the same....
It's an interesting topic. I do it differently in different accounts. In my 401k I don't have much of a choice as I can only have mutual funds, so I tend to "diversify". In my IRA and personal investment account, I have a lot invested in my top companies, but truthfully I've done very well finding early stage companies that I think have tremendous potential and putting a smaller amount of money into those. So I basically have two or three anchor investments which would go along with Peter Lynch's and Warren buffett's recommendation, but then I have smaller and definitely riskier bets on three or four early stage growth stocks. I think that gives me the best of both worlds. And in my HSA account I tend to select high dividend yielding stocks.
In fact, his fund had to follow the rule of no more than 5% of any stock in the portfolio, so he had no choice but to diversify and maximize his holdings of good stocks to 5%. Also, the majority of his stock holdings were simply to get the mail listing. Source: all explained in his 2nd book
You have to buy more companies when you are targeting smaller upcoming ones, simply because they are very tiny with less market cap and you have loads of cash. 😂😂 It's simple math man. 🙏
But if you're the type of person to be too "ignorant" to find only one good stock, why not just buy index funds instead of diversifying with 30 different stocks?
Brilliant! This has been both a reassuring video for me as a concentrated investor but a supreme educational instruction for uncertain investors. Thank you!
With al due respect, but the statement from Lynch was from 1997 and how I see it the statement from Buffet is also from a very long time ago. Is it nog possible that they changed there mind? A lot has happened since 1997?
@@luuk2629 I dont have a link but you can watch berkshires annual meetings and you will quickly find it. They still believe this (i am 99% sure) but they cant necessarily follow the strategy in their businesses because of either rules of fidelity or size of Berkshire. Also read Lynch's book:)
Yeah.....but if you are a value investor, and your holding period is "forever"....then how is your 1 stock always a value play.....highly doubtful.....unless you never plan to add money to your stocks and buy with a one lump of course
The cost of paying for someone to analyze businesses for you is almost always more than any advantage over an index fund - this is certainly true for smaller investers like me with less than a million. I am ignorant about most of the market and have only a certain percentage of confidence in the tiny parts I know about, so I invest that percentage in a few stocks of businesses I understand and the lion's share in a combination of the s&p 500 and an index of Canadian all caps (me being Canadian)
Even Peter Lynch, buying 10 companies to follow their stories, is using diversification before he has enough information to choose his favorites. He doesn't use diversification indefinitely.
Six companies is my preferred number. Now I have core companies and then I have supporting companies who I don't really bother touching, I just let them reinvest their dividends. In total I have 23 companies publicly. I noticed that if I wanted to get anywhere with my strategy I'd have to concentrate more into fewer companies so now I just hold the others and have chosen 6 core companies. Maybe I'll on to the other companies as my networth grows and the total amount of cash I have coming in becomes greater.
I think theres nothing wrong with 100+ stocks if you see potential but more important is to know the top10 or 20 and buy more of these. The others i start with small positions
That was one heck of a terrific presentation you made I highly appreciate it and it makes a lot of sense thank you. Diversification for some is the way to go and for others it’s not it really proves there’s no one formula for all.
To me I think 10 to 12 dividend stocks and 2 to 3 growth stocks is a good amount. I don't feel I really need to have 20+ dividend stocks to live passively in the future or at least I don't think so. I could use that extra money I would spend on those other stocks and build up my position in the companies I really like. I don't want to open up my stock portfolio and have a giant list of like 50 stocks to scroll through.
Hey Brandon, just want to say that your videos are excellent, it must help a lot of investors out there. Keep it up mate, a lot of the young investors these days want to become rich quick and disregards value investing and go for the long haul. I have taught a lot of my friends how to invest with the value approach and they've done very well. However, I can't seem to find many people that I could have a decent conversation about this kinds of things.
If you look at how wealthy people invest their money, the vast majority of them are very well diversified with 1% or less of their money in many things. That said, they also seem to make big bets on a small subset of stocks. So perhaps a hybrid approach is best.
I love how Buffett says "Diversification is for lazy people and there is nothing wrong with that". Thanks for the video!
People aren't lazy. They're busy working and taking care of things like children. If your job is the stock business, then yes, you shouldn't invest in mutual funds.
@@TimeIdle right
this hypocrite buffet said no diversify but then have like 50 stocks in 2021 lmao
@@TimeIdle People are lazy as hell !! I've told people that if they read five or six books on the stock market they will be able to blow away the averages. Everyone I've ever told that has said they wouldn't be willing to read that much.
Check out this idiots diversified portfolio lol Buffet is right en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway
”Why would you put money into your 27th best idea?”
Love that.
My strategy:
- start with S&P500 ETF as it is pretty fool proof for any starter if you have the patience to not touch them
- through the years find stocks that you understand and buy them too
- get your portfolio in a 65% ETF/ 35% stocks balance
- hold
Solid 👍
%50 index, %50 individual stock, so far so good.
So semi-ignorant or schizo? 🙃 anyways gl with your investments
Time frame? How long have you been investing?
"Don't put all your eggs in one basket"
Nice try, basket industry
Most people seek instant gratification, which usually doesn't go well. so set goals 1-2 years out instead months out, and you are likely to be much more satisfied with the results.
Experience definitely beats hard work and profits come from proper trade execution.
@@lingwallace5265 I looked up the lady you mentioned and I must say her profile is pretty impressive... I'm definitely going to write her an email
Actually if you do research, your goals for investing should be more like 5+ years out. Data actually shows that results are much less predictable even a year or two after investment. If you make good decisions consistently and buy at good valuations, the results start showing correlations after 5+ years, and begin to get very consistent after 10+ years.
If you choose a wonderful, highly profitable business to invest in, it is highly likely to outperform the S&P500 after 10 years. The problem being most people won't know if they are good at picking stocks or not for at least 5+ years...
Interesting theme. It's about how well you understand the industry your investing. Then you can decide in which stock to take
I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?
Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge
Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.
There are a lot of independent advisors you might look into. But i work with Christine Jane Mclean and I have been working together for nearly four years, and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
@@carolpaige2 I really do not like her. She ran away with all of my cash!
Stock pickers recommend picking stocks, but probability shows even the pros rarely beat the index. How about some Jack Bogle interviews in the mix?
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There are many reasons hedge fund managers don't beat the market. Reasons: (1) -- Career Risk, (2) - Continuously accepting new money into the portfolio, (3) - Trying to generally match the S&P 500 every single year so investors won't pull their money from the fund, (4) -- based on #3 -- FEES. All they care about is getting their annual fees.
I encourage you to read the Intelligent Investor -- there is a good chapter that explains the why behind why money managers don't outperform the market (80%ish of them)
Love this. I'm relatively new to investing, but the common 'wisdom' of diversification always struck me as a great way to tread water. For the few good stocks you hold, the rest drag you back. In my initial tests, diversification always ended in a short term net loss, while taking the time, studying fundamentals and making deep, calculated investments has resulted in the big strategic wins.
It's certainly "to each their own", and some just want to hold SP500 for 20 years, and that's totally fine. But I want to read the public sentiment, study the fundamentals, track the trends and then lay my bet to test my knowledge of the world around me. That's half the fun.
I'd add that it's really not as easy as finding the "Perfect business" and ranking them. You'll have one with strong and consistent sales growth but poorer FCF growth, and one with less consistent sales growth but better FCF growth for example and at that moment in time they might be your two best options, now enlarge that a bit, all 10 of your options may be like this, or all 30, because there isn't one single company with the perfect balance sheet or we'd all be invested in it.
That's when you gotta listen to your stomach 🤷🏼♂️
Its fascinating how Lynch had literally more than 1000 stocks in his fund and understood all of them well at the same time...
He didn't necessarily know all of them in depth - he had a theory that to get to know a stock you had to own it. He'd buy a lot of little positions in a lot of companies he had a passing interest to help him keep track of some of the more interesting ones. This isn't the same as diversification.
He have employee to track 1000 companies, if you are an individual stock investor, i m sure you would have hard time tracking more than 5
@@AJ-rc5lr I am in 37 and I track all of them. I am retired though so I have extra time.
Small investors like us cannot follow the method of the billionaires. They have insider information and direct influence on the company they invest in.
You should read Peter Lynch's book, one up on wall street. Smart money isn't so smart, and dumb money isn't as dumb as people think.
@@MingTheKing100 Correct! Well said.
Small investors are not beholden to share holders, though -- you can take far more risks without being fired. Funds like Berkshire Hathaway are designed to preserve wealth more so than to rapidly increase it.
Completely agree.
When it comes to investment, diversification is key. That is why I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech and Health.
The market is so volatile now to be depending on bull run to make profit,I advice everyone to trade now with a working program with like that of Kathy Genelle Britton so far she is helping me find investment that has significant growth potential.
The stock market is still a fantastic tool for building wealth, however, so it's wise to consider investing even if you don't have much money to spare
I’ll take investments in stock any day they’re very remunerative only problem I’m having is I really don’t know how to go about it,I do get lost and overwhelmed by the markets. Any solid pointers in reaching this trader would be helpful,I’d appreciate if I got a reply
Interesting I'm also a subscriber of Kathy’s signals and if I were to rate her accuracy, I would say perfect 👌, she has the best trading {ROI}.She is a regulated broker so she is very much accessible to the public, just search her full name online, check out her website for information concerning her services, then mail her for guidance.
Interestingly those are the sectors I began pulling out of at the beginning of the year---except for AVT and I just got back into GFS so I have a couple techs now.
Personally, I use a mixed approach. I have a small portion in ETFs, bonds, precious metals, and dividend yielding REITs. However, the bulk of my portfolio is in value stocks I love e.g. BABA. When the value stocks start tanking into an area of value, I can sell down my bonds, precious metals, or ETFs to raise cash. I sell put options on the individual stocks so I get paid for someone to force me to buy the stock. Every month, I just find something to passively invest into with a portion of my monthly income: bonds, ETFs, REITs, Gold etc.
Dude, I must say how by listening to pabrai you be like " I can so damn relate to him" With all your videos I feel that way, your videos are helping me out extremely
Thanks you bro 🙏
100%
I’m ignorant and don’t know how to analyze businesses. I’ve learned I can’t beat the market, so I diversify, and the returns of an index fund are still really good.
"There's no use diversifying into unknown companies just for the sake of diversity." Peter Lynch
@Pinned by New Money someone should really ban these bots
I think there’s one additional layer- it depends on your intentions- for growth and active you have to be selective but for dividend investing it’s a bit different because you want a diverse array of stocks to create that income so if something happens that whole accumulation you’ve been doing doesn’t go in vain....
Thanks for watching, for enquiry and Moderation
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So if you have a small amount of capital to invest in its better to not overdiversify and invest in growth centred stocks?
Thank you for the all the work you put into this channel, this is my favorite finance channels on YT. As someone new to investing these videos are a great way to learn. Including the live interview and then adding your commentary after is extremely helpful. Keep up the videos!
I try to balance my portfolio as much as possible by diversification. Thus I have my interests set on key sectors based on performance and projected growth. They range from the EV sector, renewable energy, Tech (5G companies, Isreali) etc. Also the health sector (Genome companies. Medical Marijuana).
Also important to note; do not just diversify by buying different dividend paying stocks, but also by ensuring that these are from different industries or sectors. In other words, do not invest all of your money into transportation stocks, or all of it into banking, etc. Diversifying across industries or sectors is the way to go.
To succeed in the financial markets, you must review and put into consideration, the dynamics of your trading asset prior to investing. Analysis Based on Research is Vital which is why; I recommend trading with a Professional if you don't know the basics.
Where can I learn how to trade stock options? I've been watching videos and still confused.
@@qiuyueshu5459 To be honest I am no expert myself, I run all my stock related activities through my broker LORI LYNN GILE. Her stock picks never fail fail and she is always accurate with her projections.
@@johnpatrick5716 Lori Gile is an Elite trader by every means. Her strategies come from several years of trading experienced coupled meticulous research. She is one of the few Analyst dedicated to upholding a consistent record.
Buffett himself owns about 20 companies with his company, so really the world has changed since that time, we do have many wonderful business at this age in time.
Love your vids, been watching for just a little bit, but hear you talk often about diversification. but i'd love to hear you talk more specifics, like to also diversify within different sectors (like not have 90% of your portfolio in tech)
Thanks for watching, for enquiry and Moderation
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Was thinking about this .. and you uploaded a video today. Really helped!!
I would add two caveats:
1) Let's say you are already invested in 5 companies that you really like, but none of them currently come at an attractive price when you have money to invest. In that case it might be a good idea to add a 6th one. (Unless one of the first 5 is so highly valued that it makes sense to sell.)
2) If you are on the level off Buffet, Lynch & Pabrai, you may be confident enough in your three favourites. However, most of us are not quite there. The question is, is it more viable to analyse 3 companies like Buffet would or 10 companies with a still sufficient confidence level, all while you have a job/business that doesn't involve analysing stocks?
I would say, 10 to 15 stocks are still okay for non-professionals (that is currently my personal comfort zone). If you have enough time and find enough opportunities, maybe 20.
Tell me how your average joe can even understand 1 business. Analysing 20 would be madness and just lead to speculation. If i was a new investor i would research 1 stock at a time until i find an undervalued and good business which i would probably buy and then research some more. If i found other great but overvalued businesses along the way i would keep them in mind if they suddenly become undervalued. Then after some time i would research some more and eventually look for more oppertunities. You never really have time to own 20 businesses
@@mikkelhansen3714 Well, if the average Joe doesn't understand one business (or doesn't habe time for it), they should go with index funds.
If course you analyse them one at a time, it takes far less time to keep track of a business after that.
The point is, you can still make good investments without spending as much time with each business as a professional would (otherwise we should all go with index funds and the discussion is pointless). But if you do so, you need higher diversification to make up for the lack of thoroughness (i.e. partial ignorance). There isn't a linear relationship between thoroughness and time spent though. So you can probably analyse and keep track of 10 businesses on average Joe level (while still having a job) in the time it would take to do just one at Buffet level (while not doing anything else).
There is going to a sweet spot somewhere for everyone. It won't be 50 but it also doesn't have to be 3.
The good thing is, if you only invest after you've done your homework, you will just reach the natural end of your capacity without descending into speculation.
@@mikkelhansen3714 still sounds like a very time consuming "hobby" ;-)
@@elsemuller2460 yeah no it’s a lifestyle and it certainly isnt for everyone. But its working out pretty well:)
I enjoy researching companies and trying to educate myself
Good snippets from these pro investors. I felt the re-explanation with stock footage was unnecessary however.
It would have been good to include buffet later comments that top sp500 companies today were not even in the list 20yrs ago. And top business 20yrs ago are nowwhere near the top today. Also he now recommends his family to index after his death instead of holding a few businesses for 30yrs. So if you choose to own individual stocks you need to stay on top to mitigate concentration risk.
That is the essence of Buffet's philosophy. He says he only buys businesses he understands. So for the non-professional investor like me who is investing to protect his wealth and complement earnings in a 20/25 years horizon, there is nothing bad in investing in diversified index funds. Plus, even with ETF you can aim at specific sectors, while not having to pick who the winners will be in 10 years' time. I personally have around 30% of my portfolio in only 4 stocks. The remaining 70% is a handful ETFs and I am happy with that.
Your videos are crazy good. Keep up the good work. We appreciate you 🙌
A good video for beginners. I guess most experienced investors would have similar position of owning fewer stocks which they know quite well. One more thing to add: stick to industries you are familiar with, the ones in which you have a natural inclination to read news, stories and happenings in that industry (even if you didn't invest any money). Do not invest in an industry or company if you cannot talk or discuss for 10 minutes on the industry, the company's history, products, markets, competitors, recent financial performance etc.
Sometimes some diversification can be a good strategy. For example, while you want to stick to familiar good companies you may also think it's a good idea to put some money in some futuristic industries and companies you reckon have good potential five years down the line (e.g. renewable energy, hydrogen fuel, metaverse etc). A small part of your portfolio in a few such start ups is not a bad idea. If they didn't do well as you expected then you lose some money but if your prediction is right then you stand to gain a lot. So diversification is not bad by itself as long as you are clear on your strategy why you are in the stock market, what's your short, medium and long term expectations, what's your risk appetite etc etc.
And here I am buying the total stock market ETF
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The vast majority of mutual funds underperform the total stock market ETF. That is simply a fact.
To think that you, a random individual investor, can outperform the majority of mutual funds is simply delusional.
Probably outperforming most who are listening to buffet and lynch
Taking into account the high fees and expenses of classics fonds, you will do better than many folks who are investing.
Buffet, Munger, Lynch, and Dalio all have results that speak for themselves, but Pabrai and Bogle have dedicated their lives to helping the common man understand investing. I will respect everything the others say, but it’s those two I will obey. If whatever I’m doing doesn’t line up with Pabrai, I correct my course to match his.
Yeah Pabrai is a breath of fresh air. A lot of the others try to come across like big swinging dicks, whereas Pabrai seems down to earth and often answers the question without too much dramatic bs.
Good point about entrepreneurship, I had a boat dealership and was “all-in” for years without loosing sleep. Avoiding debt kept me calm through market crashes and economic turmoil
Really helpful video, as always.
Another thing to add is that I think people have an idea that by diversifying they spread the risk of a company facing a significant challenge in its operations. The problem with that approach is that good businesses are less likely to face self-inflicted challenges, and are more likely to have the resilience to address externally inflicted challenges.
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I'm currently holding 18, out of those I've identified 7 that really are adding nothing of real value to my portfolio, so I'll be divesting myself of them and getting down to the 11 great stories that make up the rest. Those 7 are in industries that I felt I should be in, just because I thought I needed to be in those industries. Realising now that it was unnecessary.
How does this contract with these same professionals advocating for Index funds? How does that differ from diversification?
The point of investing in index funds is to not lose to the index. The point of stock picking should be to try and beat the index you're comparing your performance to. The global stock market is certain to go up with a long enough time horizon, so with index fund investing, you are sure to get that compound interest.
Invest in a index fund is like you are invest into the whole country or a the whole industry
They can get bigger results because they can pick those businesses and take it to the level of meeting the CEO if they put billions in it. Your regular Joe can't do that otherwise everyone in the market would be rich.
I’m a believer in And and And , not And and Or…
Why not do both ?
Passive invest a proportion AND invest a few individuals you understand .
Yeah!
Absolutely agree! E.g., I've diversified my mum's portfolio(which I handle, and wanna keep it low risk. 6 companies), and till date shows 41% returns in the past 6 months. My own portfolio, on the other hand has only 1 stock, my own chosen and understood business, and it shows 99.46% returns in the past 6 months! It made logical sense to me at that time, but after your video which includes these stalwarts of investing, seems like I wasn't being that stupid! Riskier, agreed, but sensibly risked.
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6 stocks in your moms portfolio isn’t considered diversification. You don’t diversify away unsystematic risk with only 6 stocks lol
Would You mind sharing which stocks You own? Or at least the sector or industry? I think it's great helping your mom!
@@TheYochillax well, it's 6 stocks, but I wouldn't exactly club those choices under "unsystematic risk" as I didn't just buy rif-raf companies. They're large cap companies(banks and FMCG sector) which move up at a snail's pace, and sometimes not at all. Only 2 of those 6 companies are small cap digital IT companies, which are doing the bulk of the lifting.
Additionally, the number of companies you choose, to some extent, depend on the amount you have with you to invest as well... There's only so much you can buy with 11k USD. lol
@@andresm7029 thank you for your kind words! Well, you probably wouldn't know about the company as it's listed in the Indian stock market, exchange called NSE (National stock exchange). It's called happiest minds, an almost purely digital IT company. Wish you the best for your investing endeavours man, cheers!
great video.I have 8 stocks.4 growth stocks in my industry and 4 FAANG stocks.I now put money every month into 1 of the stocks to minimize trading costs.I actually select the one that has gone down the most as i believe all 8 have potential to go up.
Great content! To add: Markowitz (1952) proved 20 stocks, and then Graham (1968) refined and said 1-30 stocks maximium before it is similar to market return. With lower transaction fees recently up to 50 stocks can be held (Morningstar) but I think 20 stocks is still a good rule for maximum amount of different stocks in a portfolio. That being said, sometimes 'cash is king' in uncertainty and higher interest rate environment albeit inflation hurts, unless your cash is in USD which generally strengthens in turbulent times.
We should be careful on money useage,if you are not spending to earn back,then stop spending.
The right chioce of an investment has always been a big problem for me I know picking a wrong investment will leave a big scar in the future
kindly recommend any reliable professional please
@@yonglee4810 I heard that his strategies are really good
@@evanscarter3504 Yeah
He has really made a good name for himself
I own 8, from which one is like 70% of the total value. Grabbing on to the running train, not gonna lose a chance for the sake of diversification
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Why not both? I hold indexes from 3 different countries plus an emerging market etf. That's how I diversify.
And I also pick stocks. But I only have a handful and I go in big when I find a good one.
I want to know how to calculate intrensic value if cashflow is negative
you could use EPS or net income or revenue itself instead of cashflow
Well, if cashflow is negative then so is the intrinsic value. So if you do a DCF calculation, the current year(s) will reduce the total value of the positive contributions in the future.
@@Everest314 thx bro
"if theres no cash flow- just say NO".
If you understand a business model on a very deep level you don't necessarily need to keep up with it everyday or even every quarter. If it has a big moat, great management, and a clean balance sheet you can just let it ride and check back in occasionally. And you can use that time to find even better businesses or maybe better valued opportunities.
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Great video! I like that you show and analyze clips of the great investors.
Cheers!
@@NewMoneyRUclips I Second that! Love your videos Brandon! Cheers from Mexico!
Love your vids. Keep up the good work!
As a person who runs a business I just want to clarify that I *DO* occassionally get stressed about putting all my eggs in one basket.
Diversification is not against ignorance or because you are passive. It's against risk. While I agree with their sentiment, they all come from a place where they can afford to do low-yield and low-risk investments because they already own large amounts of capital. For most people, higher-risk investments are a necessity if we want to build some capital more quickly, in which case diversification makes a lot of sense. The approach being, if you lose, you lose small, but if you win, the winnings are bigger. It's not about ignorance. "Protection from ignorance" suggests that you are not doing enough. Whoever thinks that they know all that they should, have not been paying attention. There are always things you cannot predict. And "the market can remain irrational longer than you can remain solvent".
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Only 3 months into investing. I'm 100% in Baba. I need 15 more shares at this discounted rate then I will then move to a 2nd position. I feel comfortable doing this because I personally don't see the need to break up the money I have every payday just to feel like I'm diversified.
Wow, yeah using all speakers and breaking it down was such a great video
Stock market has always proved to remain a source of income for the majority of investors and traders
I’ve tried beating the market by myself, but my strategies are ineffective, my losses are far more than my total profits. It’s disheartening 😞
@@sammywest9594 Take this advice -Get a broker so you don’t have to regret joining the market. Losses are inevitable but experts have the tendency to narrow that line and make more profits efficiently
It is quite interesting seeing how investors are joining the stock market. It is rewarding anyway don’t just get emotional as the results can be disheartening without the help of a professional
I have earn over €3k trading with Ryan Hans strategies. My love for the market is a result of the profits i make daily, it has been the best move i made this year. Passive income is key to building wealth
@@Marie-qm2uf Id appreciate if you shared his cøntact info, please
Love the channel. Big admirer of Buffett, Munger, Lu, Lynch, Pabrai, Town, Greenblatt, etc. I have a few individual stock holdings based on my understanding of how these greats value a business, but the majority of my assets (90%+) are in ETFs...mostly indexed. If I had more time, I'd probably invest more in stocks and less in ETFs. For the average person, indexing through an ETF is still the best bet. More individuals have accumulated wealth through indexing than any other investment vehicle (thank you Bogle). Even Buffett has instructed the trust for his wife to be 90% invested in an S&P500 index fund. Great conversation.
Are you investing in very broad Etfs or also some sector plays? I think in certain times, like last year, specific sector Etfs can be pretty nice, if you can't pick the 'best' company in a sector, like Energy or sth.
Same. I just wish I could send money back in time to when I was young and poor.
I think it is also a question of time, fun & effort you want to gift into investing. If you are happy buying 10 stocks and interested in their business, analyzing them, no problem there. If you are happy with buying one single ETF on ACWI or FTSE All World and focusing your remaining time on other hobbies than investing or higher income generation by learning for a better payment/own businesses/real estate etc., also fine. With both ways you get out with more money, compounding interest and happy time!
With one caveat: with stockpicking -in theory- you can lose ALL your money, especially if you own only ten stocks (most companies even only exist 10 -20 years!). With ALCW this will never happen.
If I put my hand up and admit ignorance, and don’t care to learn analysing businesses then index funds will do for me I guess?
Those returns though
Yes, that's true Adam.
Yes it will. but if you want to put in the time and effort you can achieve much more than 7% a year. look at buffet with 3x that every year for a lifetime. that coupled with compound interest and you go flying. but indexes are good for passive investors. problem is that inflation takes a third of that and so it is pretty mediocre unless you have a lot of money invested.
Nothing wrong with that at all. Buying single stocks without some sort of analysis can lead to some bad investments.
I’m new to investing but so far I think I prefer a hybrid approach of both buy and hold and rebalancing at certain intervals.
I like the caveat at the end"Also the price you can buy the business at" Just like it was thrown in as a after thought.
Have you done a video on analysing and finding for example 5 great business' or rather how to analyse and understand a company like Buffet talks about? I only look at motely fool and other stock talk but its not really analysis
I have many companies because I buy a moderate stake when bad things happen to good (not necessarily great) companies. I sell when the price returns to the correct valuation. If it's a great company, I keep them longer.
I am reletivly new to investing - bought me first share in 2019. I pumped my stocks to over £1.000,000 with TSLA SHOP and SQ. (unfortunaltly they all tanked in 2022) but if I had put the rest of my money into these three, instead of diversifying into some stock that lost me £1000s because of ignorence, I would have propebly pumped to £1,500.000. I have consolideted my loses in these small companies and bought more of my three winners
even as an active Investor you/we are still a passive in the business, means that we have no control over the company no matter how well we understand their business. so, imagine you put all your options on wirecard...
obviously, it makes sense to go for best and second-best etc. if you are just an observer.
Wow, Thank you so much for this clip, I finally have a clear answer as to how I should start investing at the age of 50, having more time on my hands I will research reputable growth stock companies to keep at least 6 of them in my portfolio and keep topping them up instead of so much hype over index funds and etf’s that require 20 yrs plus for any substantial growth, cheers!
6 companies has also been a really good calculation for me. Decent protection and much higher yield than 50. 👌
All-in in one stock is madness. No matter how good you analyze the business, you can’t protect yourself from black swan event
People think I am nuts for having 23% of my funds into one stock (Microsoft).
You could have all your money in microsoft and probably be fine. Bill Gates seems to be doing alright LOL. Most people in the Forbes 400 got rich off of one business…tesla, amazon, microsoft, walmart, etc. Charlie Munger only owns three stocks I think and he’s mega rich.
@@Duke_of_Prunes that's one of the safest places to park your money. MSFT, AAPL
One thing we left out is value. One Stock might be attractive at one point in time, another Stock at another point in time. If you're buying individual stocks at different times, your portfolio could still end up quite large.
Rightly stated!
The problem with these debates is that we listen to a billionaire, for the average investor ETF index is the best initial investment until you have enough capital to invest in the markets. When you buy a share you do need to approach it at trying to find good busineses at fair price rather than trying to model on a buffet etc
Thanks for watching, for enquiry and Moderation
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I got 16 right now all individual stocks. In about two years I will analyze them see which ones did the best and reduce my portfolio by
Well you can’t go in just one stock because of timing. Your best stock may be a good at a certain time due to it being undervalued.
While your 27th best stock may be at a better price point in the future when you have more money to invests.
Another point is that extremely wealthy people have different asset allocations. Stocks may only be 20% of their entire portfolio while they invest in other asset classes.
Their goal becomes more about wealth preservation than growth.
I think you can develop a fine "diworsified" portfolio by using a valued-based, buy-and-hold approach.
To begin with, you might load up on your "best idea," but over time that stock will rise above your margin of safety price (for new purchases). So, you find a newer, currently-better idea. Repeat, a lot, over time.
Doesn't Buffett's Berkshire Hathaway currently own about 40 stocks? Some, like KO, it's had for a long time (1988). AAPL was a 2016 purchase, and at the end of 2020 it bought (or added more?) VZ.
BRK will sell when it feels the story has changed significantly (e.g., the airlines in 2020), but by holding stocks it has built up a "diworsified" portfolio. Is VZ currently its 40th best idea? No. They apparently thought VZ was a very good idea at the time of purchase. But they'll probably hold it until/unless they become convinced it doesn't have a good future outlook.
Meanwhile, they have purchased, and will continue to purchase, other/new good ideas.
Unless you are retired and can follow stocks all you want. Accumulate always in your top five, but nothing is wrong with having a small amount in stocks that may pick up later. You do have to keep up your DD on all of them. I wonder if the one stock holders of Enron think the same....
how much does luck play in investing? I heard some people say Warren Buffet is just lucky though I don't think so.
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How many stocks does Buffet own? How about BRB.A?
It's an interesting topic. I do it differently in different accounts. In my 401k I don't have much of a choice as I can only have mutual funds, so I tend to "diversify". In my IRA and personal investment account, I have a lot invested in my top companies, but truthfully I've done very well finding early stage companies that I think have tremendous potential and putting a smaller amount of money into those. So I basically have two or three anchor investments which would go along with Peter Lynch's and Warren buffett's recommendation, but then I have smaller and definitely riskier bets on three or four early stage growth stocks. I think that gives me the best of both worlds. And in my HSA account I tend to select high dividend yielding stocks.
Peter Lynch owned way over 10 stocks in his Fidelity managed fund he ran years ago.
In fact, his fund had to follow the rule of no more than 5% of any stock in the portfolio, so he had no choice but to diversify and maximize his holdings of good stocks to 5%. Also, the majority of his stock holdings were simply to get the mail listing. Source: all explained in his 2nd book
@@sosxxswc Convenient fact.
He owned over 1400 stocks.
You have to buy more companies when you are targeting smaller upcoming ones, simply because they are very tiny with less market cap and you have loads of cash. 😂😂 It's simple math man. 🙏
But if you're the type of person to be too "ignorant" to find only one good stock, why not just buy index funds instead of diversifying with 30 different stocks?
I have been watching your video and video and they just keep getting better
Yep, ‘how many businesses can you keep track of?’ is a great insight to be self aware of. Thanks Brandon. 👍
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I think you should also include Charli munger
Also money comes with risk or patient and because I don't have much money to invest I've chosen the first option
Brilliant! This has been both a reassuring video for me as a concentrated investor but a supreme educational instruction for uncertain investors. Thank you!
With al due respect, but the statement from Lynch was from 1997 and how I see it the statement from Buffet is also from a very long time ago. Is it nog possible that they changed there mind? A lot has happened since 1997?
No:)
@@mikkelhansen3714 Can I ask why you think so? Or made they these statements more recently too?
@@luuk2629 I dont have a link but you can watch berkshires annual meetings and you will quickly find it. They still believe this (i am 99% sure) but they cant necessarily follow the strategy in their businesses because of either rules of fidelity or size of Berkshire. Also read Lynch's book:)
@@mikkelhansen3714 Great advice, thank you!
Yeah.....but if you are a value investor, and your holding period is "forever"....then how is your 1 stock always a value play.....highly doubtful.....unless you never plan to add money to your stocks and buy with a one lump of course
read about Nick Sleep
As many as you want
The cost of paying for someone to analyze businesses for you is almost always more than any advantage over an index fund - this is certainly true for smaller investers like me with less than a million. I am ignorant about most of the market and have only a certain percentage of confidence in the tiny parts I know about, so I invest that percentage in a few stocks of businesses I understand and the lion's share in a combination of the s&p 500 and an index of Canadian all caps (me being Canadian)
Even Peter Lynch, buying 10 companies to follow their stories, is using diversification before he has enough information to choose his favorites. He doesn't use diversification indefinitely.
Great video. Very helpful. Thanks
Thanks for watching
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Hey.... This is really good 👍
Well done!
alright yoloing in gme
Six companies is my preferred number. Now I have core companies and then I have supporting companies who I don't really bother touching, I just let them reinvest their dividends. In total I have 23 companies publicly. I noticed that if I wanted to get anywhere with my strategy I'd have to concentrate more into fewer companies so now I just hold the others and have chosen 6 core companies. Maybe I'll on to the other companies as my networth grows and the total amount of cash I have coming in becomes greater.
I think theres nothing wrong with 100+ stocks if you see potential but more important is to know the top10 or 20 and buy more of these. The others i start with small positions
Thanks for watching, for enquiry and Moderation
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That was one heck of a terrific presentation you made I highly appreciate it and it makes a lot of sense thank you. Diversification for some is the way to go and for others it’s not it really proves there’s no one formula for all.
Thank you for the knowledge this is really beneficial to novice like myself
One of the best channels out there for us retail investors
1 or 2 , is good enough!
To me I think 10 to 12 dividend stocks and 2 to 3 growth stocks is a good amount. I don't feel I really need to have 20+ dividend stocks to live passively in the future or at least I don't think so. I could use that extra money I would spend on those other stocks and build up my position in the companies I really like. I don't want to open up my stock portfolio and have a giant list of like 50 stocks to scroll through.
It's a great video, Brandon. 👏
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Great lessons are happening
Hey Brandon, just want to say that your videos are excellent, it must help a lot of investors out there. Keep it up mate, a lot of the young investors these days want to become rich quick and disregards value investing and go for the long haul. I have taught a lot of my friends how to invest with the value approach and they've done very well. However, I can't seem to find many people that I could have a decent conversation about this kinds of things.
it's really about whether beta is good enough. for me I am happy with beta and will spare 20% of my money to seek alpha for fun.
Really helpful video. Helps with making investment strategies.
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Why does Berkshire Hathaway hold so many stocks then?
If you look at how wealthy people invest their money, the vast majority of them are very well diversified with 1% or less of their money in many things. That said, they also seem to make big bets on a small subset of stocks. So perhaps a hybrid approach is best.