Thanks for your note. And your question. And let me start my answer by telling you a story ... (there's a point here ... I swear). My son, Joey, is 17 .. a high school junior ... and a great kid. Five years or so ago .. when I'd had a really good year ... I took a few thousand dollars, sat down with him ... and said "we're going to make some investments ... pick some stocks ... and we're doing to do it together."
I started by saying ... "Okay, buddy ... let's look at what you like. And go from there."
Joey dug xBox and Minecraft .. so we bought some MSFT. He loved NFLX ... so we bought some of that. He LOVES Apple products ... so we got some of that. He's a Mac and Cheese kid ... and Berkshire owned Kraft ... so we got some of that.
Fast forward five years ... Besides having a son whose brokerage account probably dwarfs most of the other kids in his class (lol), he's got a job ... he's got his own bank account ... he went to Europe last year on a Music program ... he has his own car ... in short, he's smarter about money than most kids his age ... and, heck, most adults my age.
He pays attention to the companies he's invested in ... I mean ... he's a kid ... so he's not doing fundamental analysis on these firms .. but he pays attention. And I've been really stoked to see how interested he's been in our starting this venture on substance. He checks everyday to see how the "business" is doing.
Here's the point I promised I'd make. I believe there's an intangible value that comes with investing in actual companies. It's like (and given the articulate-and-insightful nature of the question you posed ... I can tell you're a smart and observant person ... so I'm betting you've seen this yourself) ... it's like the folks who talk about "paper trading" and boast about the money they've made. They had no skin in the game ... and didn't really risk anything ...
So owning SOME individual stocks has a benefit that transcends the investments themselves.
Does that mean index funds have no place? Not at all. I own them myself. I think that a mix of the two - an informed mix ... a purposeful mix -- is both healthy and wise.
If you read our stuff over time ... you'll see that we believe a couple things...
1. Know Thyself ... you never want to go against your goals, risk tolerance, emotional makeup ... you know what I mean ... that's definite Wealth Killer material ...
2. And (with apologies to the Hippocratic Oath) ... do no harm ... I just really believe retail investors should steer clear of options ... for speculation ... or for "income." Definite wealth killers.
So ... to put a fine point on this ... the approach you talk about ... is totally fine. Especially if that's where your comfort zone happens to be. And for folks who want to add a layer on top of that ... I think you can create a portfolio of individual stocks ... both for wealth building ... and for the added benefit I hope I've described.
Loved your query. As a former reporter for many years, the only stupid questions are those that are never asked. And I can tell you're a well-informed, reflective and answer-seeking investor.
Thanks for your note. And your question. And let me start my answer by telling you a story ... (there's a point here ... I swear). My son, Joey, is 17 .. a high school junior ... and a great kid. Five years or so ago .. when I'd had a really good year ... I took a few thousand dollars, sat down with him ... and said "we're going to make some investments ... pick some stocks ... and we're doing to do it together."
I started by saying ... "Okay, buddy ... let's look at what you like. And go from there."
Joey dug xBox and Minecraft .. so we bought some MSFT. He loved NFLX ... so we bought some of that. He LOVES Apple products ... so we got some of that. He's a Mac and Cheese kid ... and Berkshire owned Kraft ... so we got some of that.
Fast forward five years ... Besides having a son whose brokerage account probably dwarfs most of the other kids in his class (lol), he's got a job ... he's got his own bank account ... he went to Europe last year on a Music program ... he has his own car ... in short, he's smarter about money than most kids his age ... and, heck, most adults my age.
He pays attention to the companies he's invested in ... I mean ... he's a kid ... so he's not doing fundamental analysis on these firms .. but he pays attention. And I've been really stoked to see how interested he's been in our starting this venture on substance. He checks everyday to see how the "business" is doing.
Here's the point I promised I'd make. I believe there's an intangible value that comes with investing in actual companies. It's like (and given the articulate-and-insightful nature of the question you posed ... I can tell you're a smart and observant person ... so I'm betting you've seen this yourself) ... it's like the folks who talk about "paper trading" and boast about the money they've made. They had no skin in the game ... and didn't really risk anything ...
So owning SOME individual stocks has a benefit that transcends the investments themselves.
Does that mean index funds have no place? Not at all. I own them myself. I think that a mix of the two - an informed mix ... a purposeful mix -- is both healthy and wise.
If you read our stuff over time ... you'll see that we believe a couple things...
1. Know Thyself ... you never want to go against your goals, risk tolerance, emotional makeup ... you know what I mean ... that's definite Wealth Killer material ...
2. And (with apologies to the Hippocratic Oath) ... do no harm ... I just really believe retail investors should steer clear of options ... for speculation ... or for "income." Definite wealth killers.
So ... to put a fine point on this ... the approach you talk about ... is totally fine. Especially if that's where your comfort zone happens to be. And for folks who want to add a layer on top of that ... I think you can create a portfolio of individual stocks ... both for wealth building ... and for the added benefit I hope I've described.
Loved your query. As a former reporter for many years, the only stupid questions are those that are never asked. And I can tell you're a well-informed, reflective and answer-seeking investor.
I hope you'll visit us more often.
Respectfully yours;
Bill