Comment by coliveira
12 hours ago
ETFs are a trap. Put most of your money in single stocks. It is ok to diversify, you don't need an ETF for this.
12 hours ago
ETFs are a trap. Put most of your money in single stocks. It is ok to diversify, you don't need an ETF for this.
> It is ok to diversify
Nay, it is not just “ok”. It is imperative that you diversify if you want a strong and resilient portfolio.
Oops wrong comment
Absolutely, I moved all my investments to single stocks that I thought would do well that decision the best that I’ve ever made from an investment standpoint, the returns are infinitely better…
This is terrible advice, are you buying and self balancing hundreds of different stocks?
Diversification is good, but you probably don't need 100s of stocks.
I can’t say I’ve tried this but the thought just came to me that generating such trades would be trivial to do monthly now.
Sure, if you want to print a 1000 page supplement and staple it to your taxes.
More seriously, I would still worry about order execution and transaction costs. You are likely to end up on the wrong side of the bid/ask spread when playing against the big boys.
If you're actually serious about this, you might as well start your own ETF. Or just buy this one I found after a quick Google: https://www.proshares.com/our-etfs/strategic/spxt Buying multiple sector-specific ETFs is another approach. I'm told that utilities are good to hold during a downturn.
In some countries (like Switzerland) you don't have any capital gain tax __unless_ you are a professional investor. What makes you a professional investor? One of the things that can elevate you to that status is the amount of trades you make.
So I am sure this is not viable for many people as buying an ETF counts like 1 trade, but investing the same money in the underlying assets count like 10s of trades.
1 reply →
What is the problem? If you buys a SP500 ETF you're effectively buying 500 stocks. You don't need that much, but if that is your wish it is still better than using ETFs.
Direct indexing is a thing.
It’s a thing but your order execution won’t be as efficient as an ETF, so you will be losing a non-negligible amount each year in slippage from the large number of small transactions
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It is very true what they said. In an ETF you get both bad stocks and good. You have no choice. If you diversify manually you can pick and choose only the crème de la creme But… people love to be lazy or just aren’t knowledgeable enough to pick their stocks themselves and thus it is safer for them to just stick to broad strokes of an index fund. For starters as basic portfolio, you could 1:1 an index fund but take out all the garbage from it and keep only the strong, bright future companies.
ETF are just noob introduction to the stock market and great one at that but to maximize returns you want to be more specific and intentional about your picks.
Where etfs are great even after you learn a lot, is exposure to whole sectors of the industry. That’s how I treat them: one - etf - an index of how a particular industry fares.
Source: I basically live solely from investments at 30
If that were true, then one would expect a competitive fund that does just that and that give higher ROI than an S&P 500 index fund (or index ETF) when you consider expense ratio. What is a such a fund? Or, alternatively, can you point us to a comprehensive list of those companies you would exclude from the index to get superior returns?
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Ah, the old trick: "I would simply pick the good stocks".
I prefer the casino.
return on the average stock is -2% iirc, terrible idea