r/stocks
Why do you invest in stocks?
A medical student asks if learning fundamental analysis is worthwhile given the statistical difficulty of beating index funds like VOO.
Made a post yesterday but need to add clarification. I'm in medicine (anesthesia) with 2 years left in training. and then will be a full physician. Since college, I have been investing in VOO only. My plan will be to pay off loans ASAP dedicate 4-5k a month to VOO until retirement.
The reason for this post is i've always loved the idea of stocks and looking at fundamentals to try to find upcoming companies. I did an MBA and loved this portion of my finance/accounting class. My portfolio only has VOO but I would love to add growth/value stocks in the future.
What deters me are the classic stats of no one beats the index funds and the monkey experiment where they went head to head with wall street investors. My initial plan was to invest mostly in VOO 90% with 10% in stocks with the understanding that I could not make anything in that 10%.
Is fundamental analysis and learning more about valuation even a worthwhile skill or am I no better than a monkey lol? I love the idea and want to actually read books and learn more about it; but at the same time if its no better than gambling at the casino, it might not be worth it. I just do not want to spend hours on a skill that has little to no actual return.
For the love of the game (i.e. gambling)
To not have to answer to questions like these
My roommate works at one of the biggest hedge funds and he just tells me what to buy and shares his thesis's. I've turned 100k of my life savings since 2015 to 3.1m today
Stock market in general grows. That's what retirement accounts are invested in
The market doesn’t always get it right or can be late in recognizing something that you as an individual see earlier. It there enough of these to make a whole portfolio, maybe or maybe not.
Think of your profession. Can you come across a drug, process, or something that you see the value that every other doctor will want to use it? But they haven’t seen it enough to get adoption and recognition so you can be early to making an investment?
I am in technology My team started using a tool that we not only saw tremendous value, but knew everyone else would. I bought 2,000 shares at $14 and 3 years later with a buy out, it was $600,000. Can’t those with an ETF.
So, use the etf you have as your core for 80-85% of your equity position and use the last piece for things you come across in your profession or personal life to spice it up a little. And if you are very busy, just go 100% ETFs and take the market returns. They do work well over time.
Good luck!
There's more to ETFs than VOO but to your point you're better off working for a living, investing in sector funds, and touching grass than pretending it's the 80s and taking advice on hot stocks from a broker.
80-90% of stock pickers are not able to beat the market over extended periods.
When was the last time, you, as a physician in a competitive specialty, at any point in your life, said, “Only 10-20% can achieve this. I might as well not bother.”
???
The comparable example would be more like a guy whose medical knowledge extends as far as reading a few wikipedia articles thinking he'd make a fine cardiologist
Money. Every other reason takes your money.
Retired early. For me it would not have been possible with just index funds.
Is there a better asset class for the dollar?
Same reason why you like to push sux
Real estate is for boomers and tenants are annoying plus maintenance. Stocks are liquid if you play it smart
Is fundamental analysis and learning more about valuation even a worthwhile skill or am I no better than a monkey lol?
I approach this with a holistic new-age take...
Given that professional money managers rarely match the returns of the indexes, it seems like the emperor has no clothes and the financial industry is loathe to admit they are scamming their customers.
Given that investment authors feel the need to write a book to supplement their income and none have presented a foolproof method to become a millionaire, it seems like that avenue is also a dead end.
Using fundamental and/or technical analysis has succeeded in finding winners. But neither produces consistent, guaranteed results that I'm aware of. What it does do is force you to become familiar with what you are investing in so that you have a better idea of why you're holding and when you should add to or sell that investment. In that way, it's more successful than monkeys throwing darts at the financial pages. Picking a stock is the easiest part of playing the market. Deciding when to get in is much harder. Knowing when to get out is hardest of all.
Researching stocks forms an attachment to the investing world. It becomes a hobby that provides pleasure. My personal view is that there is a lot of mumbo-jumbo attached to the business side of managing people's money. The same can probably be said of many professions including medicine. Doctors know a lot about biology and physiology but they don't get it perfect every time. Like financial analysts. But they are more likely to get it right when they take a personal interest in a patient. That's what financial analysis does, it allows you to bond with your investments.
To make some mfing money