2-minute read
Did we ever talk about this?:
Don’t believe we did. Still a first for me.
Not tight with the darkness retreat community?
Not yet. But after just 2 months of potty training my three-year-old, I may be making some inquiries.
I remember my first darkness retreat.
Wait, really?
It was a modified version that consisted of shame, regret, and an overall feeling of futility. It wasn’t quite as remote as Aaron Rodgers’ cave in Southern Oregon, but my downtown Cleveland apartment was a reliable alternative.
What spurred this darkness retreat if you don’t mind me asking?
Trading stocks.
Actually?
Actually.
So, what happened?
It was December of 2018. I always had been a mutual fund or index fund guy, but I thought I’d try my hand at buying individual stocks.
I take it you didn’t win the hand.
Correct. I didn’t buy many stocks but the ones I did got ROCKED. The S&P 500 plummeted 9% in 19 trading days. Some of the stocks I picked fell by multiples of that.
Turns out you’re no Warren Buffett.
That’s the thing! We glorify these famous stock pickers. We do it because they deserve it, but they’re on magazine covers for a reason.
What do you think makes stock picking so challenging?
Look at this chart:
What are we looking at?
We’re looking at a stock that fell 63% in 2000, 22% in 2002, and 46% in 2008. If you invested in this company in 2000, you’d have seen three presidents in office before you made your money back.
Politics and garbage stocks. You know how to please a man.
Or how about this chart:
That’s a fun 5-year ride.
Sure is. You want to take a wild guess at the identity of these two stocks?
No clue…
Microsoft and Apple. Also known as the two most valuable companies in the world.
Hmm that’s interesting. But you have to admit that these charts are a bit dated. Apple, Microsoft, and the rest of the tech behemoths have been on a tear recently.
You sure about that?
Enough with the charts, loser.
Enough with the short memory. Just two years ago we saw the Magnificent 7 tech stocks get their lunch handed to them. Amazon got cut in half, Facebook (now Meta) was down 64%, and Apple lost hundreds of billions of dollars in value.
So what are you getting at?
Owning individual stocks can be a psychological torture chamber. When do I sell if a stock is falling? When do I take profits when I pick a winner? When does a stock make up too much of the portfolio?
So don’t own individual stocks?
No, this isn’t an endorsement for index funds and against stocks. Rather, it’s a Socratic PSA to “Know thyself.”
Easy there, philosophizer.
Investing in individual stocks has plenty of advantages – low-cost, tax-friendly, direct control. But these advantages shouldn’t be overpowered by any psychological downsides. Because good luck making money in the market without your sanity.