Index Funds vs Individual Funds

[meditate89]

Do you believe that someone who is willing to put forth 10 hours per month of research should invest in Individual Stocks or Index Funds?


Personally I think that Individual Stocks can yield a larger return than index funds, but I have read many posts suggesting index funds are the way to go. While there are certainly some people out there who I would highly recommend index funds to, it seems to me that if you can be a winning poker player, you have the potential to be a "winning" stock picker. (meaning beating a portfolio of index funds on a consistent basis). Although I understand the simplicity and attractiveness of a few index funds, I just don't see them as a great place to park your money- especially for such an intelligent segment of the population. With a little effort, I think that anyone can pick stocks that will outperform the market overall.

It just shocks me that many wealthy(it's all relative) poker players, who I presume are fairly good at math, are willing to accept sub-standard returns in an index fund, when the difference between 10% / 12% and 15% annualized returns over 10-20 years is simply enormous.


If you have a long record, ( I would say at least 5 years, 10++ years would be much preferred ) I would encourage you to post it here, especially if you are a reputable poster. I realize that there will be some bias here, as many people may be afraid to post their results if they didn't fare so well compared to an index fund... but I would encourage anyone to share their results in the most honest and accurate method possible.

I'm sure this matter has been discussed before in great length, but it just kind of bothers me that whenever people ask for help, they are automatically referred to index funds. Perhaps they're willing to put in some more effort to get better returns, and index funds really aren't for them. Although they are simple to understand and even to purchase, I feel that telling everyone to buy index funds is truly misleading.

For example, I feel this is sort of like saying- don't play 78s from the SB, it's just a headache to play in certain situations. You can play it when you get better at playing it. But you'll never get better at playing it if you don't limp in! And while it may be a headache to play 78s- it is also +EV to play, and folding that hand over and over will really take away from your winrate!