In this podcast episode, the host delves into the difficulties and drawbacks of stock picking as an investment strategy. The expert guest points out that while a few individuals have seen remarkable success with stock picking, most retail investors actually lag behind the market. This underperformance is largely due to high trading costs, psychological biases, and the slim chances of identifying those rare stocks that significantly outperform. Instead, he advocates for a more sensible approach with broad index funds for the majority of investors. He also suggests that a small “cowboy account” dedicated to speculative investments could be acceptable if it only makes up a tiny fraction of one’s overall portfolio.
