It is harder to pick stock winners than you may think from reading some of the financial media. Yes, everyone believes they can, but after all the effort, how many Googles do they really find?
You hear about the big stock winners but how many of those potential lottery winners are available? Most importantly, how many are recognizable early on? It’s always easy to find those who did, well after the fact.
Furthermore, when you look at these relatively small numbers, you find that they had their periods of struggle. The profit numbers look excellent only after years of market wear and tear. How many investors had the stomach to buy those stocks at their lows and to hold on to them to their highs?
None of the successful securities had gone up in a straight line. Most hit bad cycles when most of the original holders lost faith, deserted ship and sold.
Market psychology is always a serious factor that dictates the lack of discipline in investors. Most take what profits they see on the way up, and run. So the odds of achieving huge winnings are even steeper.
And besides, it is almost impossible for an outside observer to properly evaluate management. Analysts who make it their profession cannot evaluate managers wisely or adeptly from the outside. Why believe the public can?
Therefore I have found the odds of this sweepstake are too steep in the long run, and suggest investing in low-cost index funds as your best bet.
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