Picking Stocks vs Saving

Paralysis By AnalysisSome more support for my contention that most people are better off concentrating their time on learning how to save money rather than learning how to pick stocks.

But are you good enough at it to make it worth your while? To come out ahead buying individual stocks, you must have some special insight that other investors don’t have. In other words, you must believe that the stock is worth more than the price investors as a whole have set on those stocks. Otherwise, what’s the point?

If you have no special knowledge, you would do just as well buying an index fund that tracks the market. Which leads to a natural question: do you have special insights? Are you privy to information

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4 Responses to Picking Stocks vs Saving

  1. makingourway says:

    Jeff,

    Truely excellent comments. On the other hand time spent analyzing the market would reduce one’s entertainment expenses (joking).

    Actually, I think the cut-off line for more aggressive investing would probably be > $1MM. It’s at that point where the investor might have enough investment income to benefit from pairing capital gains and losses.

    Regards,

    makingourway

  2. makingourway says:

    I thought about your posting a bit more and posted a more detailed response at my blog.

  3. fractalbrothers says:

    that special insight is called chart patterns.. you dont really have to know anything about the company, etc etc.. the patterns tell all. if I had real money to make the same trades i’ve made in my VSE (http://vse.marketwatch.com) account, i’d have 45% gains in less than a year..

  4. david peters says:

    There seems to be a real resistance to saving money like it makes you somehow inferior to others. If you have to save, then you aren’t making enough is how a lot of people seem to see it.

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