What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

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PRMECP
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by PRMECP » Mon Sep 03, 2018 4:21 pm

I don't care if you leave the forum or not, but I can still view your thread, steve123

Are you sure that you have been censored?

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steve321
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 4:25 pm

PRMECP wrote:
Mon Sep 03, 2018 4:21 pm
I don't care if you leave the forum or not, but I can still view your thread, steve123

Are you sure that you have been censored?
Sorry, I have been told that I am not allowed to discuss the Moderator's actions.

PRMECP
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by PRMECP » Mon Sep 03, 2018 4:27 pm

Okay. Well best of luck to you

staythecourse
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by staythecourse » Mon Sep 03, 2018 4:28 pm

Tycoon wrote:
Mon Sep 03, 2018 2:37 pm
If putting your money in Alphabet and Amazon is something that you feel strongly about, do it. The best lessons in life are learned the hard way. I hope it turns out well.
Correct. I tell this to my own toddlers. You tell them the logic and if they still don't want to learn BEFORE hand then they have to learn it AFTER the fact. Either way they will hopefully learn the lesson, but then again folks make the same mistake over and over again.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by KyleAAA » Mon Sep 03, 2018 4:35 pm

steve321 wrote:
Mon Sep 03, 2018 3:36 pm
vineviz wrote:
Mon Sep 03, 2018 3:32 pm
steve321 wrote:
Mon Sep 03, 2018 2:49 pm
ok, if you think this is trolling, could you please explain why the Kanye investment was discussed in Jonathan Clements Humbledollar?

and concering these two stocks I am contemplating, could you explain why these two experts, which have very widely read blogs and many Twitter followers, concentrate on them in this video (please note the title of the video)?
https://www.youtube.com/watch?v=XYTqrWO1_fk
Well if two guys with Twitter and YouTube accounts are suggesting it, I can see why you might think that nothing can go wrong.

There are literally eight or more people who have Nobel Prizes specifically for explaining "what's wrong with putting most of my money into two stocks".
ok but I remember that Charlie Munger spoke of Nobel Prize winner who was having his own money managed by Bershire whilst extolling the qualities of idexing.
Also, if concentrating is so silly, why does someone as smart as Bezos do it?
Because if Amazon stock drops 99%, Bezos will still be 1000 times richer than you or I could ever dream of being. You, on the other hand, would be living in poverty.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 4:37 pm

staythecourse wrote:
Mon Sep 03, 2018 4:28 pm
Tycoon wrote:
Mon Sep 03, 2018 2:37 pm
If putting your money in Alphabet and Amazon is something that you feel strongly about, do it. The best lessons in life are learned the hard way. I hope it turns out well.
Correct. I tell this to my own toddlers. You tell them the logic and if they still don't want to learn BEFORE hand then they have to learn it AFTER the fact. Either way they will hopefully learn the lesson, but then again folks make the same mistake over and over again.

Good luck.
yea but I am not a toddler. I have granchildren so I see what you mean, but I don't need to be taught the same way as them thanks. Btw I have made loads more by investing in the right rental properties than I would have made if I'd invested in the stock market.
So I must have done something right...

arsenalfan
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by arsenalfan » Mon Sep 03, 2018 4:42 pm

They are both high fliers, that is for sure.

Lots of pro/con, more con since BH is an index forum.

Amazon $2012
Alphabet $1231

Let us know how much you put in and the stock price, and let's see what happens! We can all learn from each other.

PhilosophyAndrew
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by PhilosophyAndrew » Mon Sep 03, 2018 4:44 pm

OP, surely you already know what can go wrong with limiting your investments to two stocks.

What motivates this change of heart? Are you afraid that you are missing out by letting diversification lower risk? Are you so eager to improve your returns that you don’t care about the risks that you are contemplating taking on?

If you have made a thoughtful, considered judgment that the potential benefits of the new strategy clearly outweigh the potential risks, then more power to you. Not all investors need to be Bogleheads.

From a Bogleheads perpective, your idea is a non-starter, as you must have known when you made your post. Kudos to you for seeking critique of that idea from togs audience — I hope you receive many useful replies against which you can test your new thinking.



Andy.
Last edited by PhilosophyAndrew on Mon Sep 03, 2018 4:51 pm, edited 1 time in total.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 4:50 pm

PhilosophyAndrew wrote:
Mon Sep 03, 2018 4:44 pm
OP, surely you already know what can go wrong with limiting your investments to two stocks.

What motivates this change of heart? Are you afraid that you are missing out by letting diversification lower risk? Are you so eager to improve your returns that you don’t care about the risks that you are contemplating taking on?

If you have made a thoughtful, considered judgment that the potential benefits of the new strategy clearly outweigh the potential risks, then more power to you. Not all investors need to be Bogleheads.

From a Bogleheads perpecrive, your idea is lunacy, as you must have known when you made your post. Kudos to you for seeking critique of that idea from togs audience — I hope you receive many useful replies against which you can test your new thinking.



Andy.
well as a British investor I see lots of boring companies, lots of big banks etc, that do not seem to be worth investing into, so indexing seems to be a waste of resources to some extent. Amazon and Alphabet seem super companies with no equals, so I wouldn't be wasting resources in boring, mediocre companies

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by JoMoney » Mon Sep 03, 2018 4:58 pm

Because despite my relatively positive outlook on Alphabet and Amazon as a company, I have no way of telling if the stock is a better value (or higher risk) at it's current price relative to the other 500+ stocks I might consider buying.

Because single stocks present extreme risks, like turning a $10,000 investment into $500 in a short period of time
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steve321
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 5:03 pm

JoMoney wrote:
Mon Sep 03, 2018 4:58 pm
Because despite my relatively positive outlook on Alphabet and Amazon as a company, I have no way of telling if the stock is a better value (or higher risk) at it's current price relative to the other 500+ stocks I might consider buying.

Because single stocks present extreme risks, like turning a $10,000 investment into $500 in a short period of time
Image
Blimey, that's shocking. I don't think it could happen in the future though, with Amazon being much more established. Still, I see the potential risk.

EomerTN
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by EomerTN » Mon Sep 03, 2018 5:07 pm

Compaq, Polaroid, and Kodak were also amazing at one point in time in terms doing exciting things and leading the way. Comparing how the top 10 companies over time have changed is a good lesson in humility. That said, different strokes for different folks so ymmv...

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by dogagility » Mon Sep 03, 2018 5:31 pm

steve321 wrote:
Mon Sep 03, 2018 2:31 pm
2. I've had some experience with Amazon as a customer and I realised that unlike other companies, that are interested in making a quick buck, Amazon is building for the long term future. They want to please you as a customer like nobody else does...
So have I. Been a Prime member for many years now. More and more, I find their pricing to not be such a great deal. Very convenient shopping though.
Bottom line: I'm not as enamored with Amazon as I once was, so I no longer automatically purchase "stuff" via Amazon.

What does this mean for purchasing the stock as a very large portion of your portfolio? Probably very little, but it's one data point. Bigger reason I wouldn't do it, is you're likely chasing previous returns and are definitely limiting your equity diversification. Two things that would "keep me up at night" as Bogleheads are fond of writing.
Taking "risk" since 1995.

Broken Man 1999
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by Broken Man 1999 » Mon Sep 03, 2018 5:39 pm

Cisco broke my heart not once, but twice. :oops:

Fortunately Starbucks and GE soothed my feelings after the great recession.

When I invest in individual stocks, it is always in five or more at a time.

And though the collection may grow splendidly, I never risk more than 5% of my portfolio at the time.

Good !uck. Two stocks only would be too risky for me.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by jayk238 » Mon Sep 03, 2018 5:44 pm

steve321 wrote:
Mon Sep 03, 2018 3:45 pm
arcticpineapplecorp. wrote:
Mon Sep 03, 2018 3:38 pm
steve321 wrote:
Mon Sep 03, 2018 3:25 pm
KyleAAA wrote:
Mon Sep 03, 2018 3:19 pm
. Whoever made that comparison has no idea what they’re talking about.
It's in the Youtube video I posted the link to above. Towards the end if my memory serves me He says that they invest in plenty of small tech companies, it's a conglomerate like Berkshire.
Re-read your statement. If you look closely, you see the fallacy of your argument.

Berkshire is more diverisifed then Alphabet because they invest in different types of companies and they own large and small and value and growth. You say Alphabet invests in plenty of "small tech companies". That to me doesn't sound particularly well diversified. Diversification isn't just about the number of companies you own, but also about the different types, sizes, styles, sectors, countries. The total world market gets you all that. Alphabet doesn't.

If you're planning on betting a million pounds in each, what percentage does that 2 million represent overall? That's worth knowing and considering.

The time to have bought these two companies you covet is in the past when they were much cheaper. Do you think it's easier for a mega-large company to double in size or a smaller company to do so?
The total for the 2 stocks (2 millions) would be 30% of our liquid worth though well below 20% of our worth if we consider our rental properties.
Yes you are right, of course it would have been much better to spot them earlier on when they were smaller. I was solely interested in real estate though at the time; so I missed out.
If you have 2 million and its only 30% if your net worth then you should know a lot more than you let on. Earlier you nearly posted a statement regarding probabilities that you deleted. The statement was so egregious that I was surprised anyone would state that. You made a claim along the lines that if you flip a coin 5 times and get tails 4 out of 5 times or some such that the probability was 5*(1/2)^4 or something. Maybe you can correct me there.

Regardless- that 5 you had in front as a multiplier was absurd.

Its amazing someone w 6+ million dollars would have such grasp of statistics

[OT comment removed by admin LadyGeek]

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randomizer
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by randomizer » Mon Sep 03, 2018 5:54 pm

Do it. If you want more risk, get into crypto currencies too: they can get you rich, and fast.
87.5:12.5, EM tilt — HODL the course!

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steve321
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 5:56 pm

jayk238 wrote:
Mon Sep 03, 2018 5:44 pm
steve321 wrote:
Mon Sep 03, 2018 3:45 pm
arcticpineapplecorp. wrote:
Mon Sep 03, 2018 3:38 pm
steve321 wrote:
Mon Sep 03, 2018 3:25 pm
KyleAAA wrote:
Mon Sep 03, 2018 3:19 pm
. Whoever made that comparison has no idea what they’re talking about.
It's in the Youtube video I posted the link to above. Towards the end if my memory serves me He says that they invest in plenty of small tech companies, it's a conglomerate like Berkshire.
Re-read your statement. If you look closely, you see the fallacy of your argument.

Berkshire is more diverisifed then Alphabet because they invest in different types of companies and they own large and small and value and growth. You say Alphabet invests in plenty of "small tech companies". That to me doesn't sound particularly well diversified. Diversification isn't just about the number of companies you own, but also about the different types, sizes, styles, sectors, countries. The total world market gets you all that. Alphabet doesn't.

If you're planning on betting a million pounds in each, what percentage does that 2 million represent overall? That's worth knowing and considering.

The time to have bought these two companies you covet is in the past when they were much cheaper. Do you think it's easier for a mega-large company to double in size or a smaller company to do so?
The total for the 2 stocks (2 millions) would be 30% of our liquid worth though well below 20% of our worth if we consider our rental properties.
Yes you are right, of course it would have been much better to spot them earlier on when they were smaller. I was solely interested in real estate though at the time; so I missed out.
If you have 2 million and its only 30% if your net worth then you should know a lot more than you let on. Earlier you nearly posted a statement regarding probabilities that you deleted. The statement was so egregious that I was surprised anyone would state that. You made a claim along the lines that if you flip a coin 5 times and get tails 4 out of 5 times or some such that the probability was 5*(1/2)^4 or something. Maybe you can correct me there.

Regardless- that 5 you had in front as a multiplier was absurd.

Its amazing someone w 6+ million dollars would have such grasp of statistics

[OT comment removed by admin LadyGeek]
Look mate, I used to like your posts, but not this one.
First of all, to get 4 heads out of 5, you have indeed a probability of 5*(1/2)^5 (not 5*(1/2)^4 like you write). The 5 is not absurd, it's due to the fact that any of the 5 throws can be a tail. (ie THHHH, HTHHH, HHTHH, HHHTH and HHHHT, each of which has (1/2)^5 So the total is the sum of those 5, i.e. 5*(1/2)^5 Sorry).

Second, if you count our rental property, we have twice as much as what you write (10+ M£ not $). I made my money through my job and expecially with real estate investments, so I had no need for probabilities (though the calculation above is correct, please take a course in permutations and combinations and you'll see).

[Response to OT comment removed by admin LadyGeek]
Last edited by steve321 on Mon Sep 03, 2018 6:08 pm, edited 1 time in total.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by JoMoney » Mon Sep 03, 2018 6:01 pm

DeadPoets wrote:
Mon Sep 03, 2018 5:49 pm
...
:shock: :twisted: :oops: :D Politically tainted posts won't last long on here :beer
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by Toons » Mon Sep 03, 2018 6:02 pm

Castles In The Sky?
:mrgreen:
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Elysium
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by Elysium » Mon Sep 03, 2018 6:09 pm

I am one of the very few orignal investors in Amazon on this forum, before it became the company that it is today, so I guess I am probably the most qualified to answer this question.

Back in fall of '99 I too dabbled in tech stocks like most everyone and the company I purchased was AMZN for $70 a share. I do not think there is anyone around here who had purchased Amazon for that low given it's price today.

I did not hold on to the stock though as I learned about the virtues of passive investing and diversification, it was sold for a small profit while I still could. Soon after, the tech crash came and AMZN went down with everything else. A year later by fall of 2000, it was trading at half the price I had originally paid. Had I held on to it, I would have now lost half of my original investment, and with the entire tech sector hurting there was no telling whether AMZN could survive and get the money back. Fast forward to another year, and by fall of 2001, it is now trading at an all time low of $6. I would have lost more than 90% of my original investment, looking extrememly foolish, while small value stocks are soaring, and Bogleheads are talking about virtues of value premium. Not a good situation to praise the genius of Bezos.

We can keep tracking this, stock market recovered by 2003, but Amazon did not get back to my original price of $70 still, it keeps meandering along as the company isn't making profits and investors aren't convinced it is about to take over the world.

It took 8 years from the date of my original purchase in '99 for Amazon to break even back to same price in mid 2007. Okay great, now I am about to make profits, right? Not so fast says the financial crisis of 2008 and down goes Amazon to the depths of $40 by late 2008, at the peak of crisis.

We are staring into the depths of financial mass destruction, and after nearly 10 years of holding the stock I have lost nearly half of my original investment, had I continued holding it.

We know what happened after. Economic stimulus in the form of bailouts and QE by Fed pumped money back into the economy and saved the major corporations. Amazon started taking off by late 2009 / early 2010. I am in black after holding on for a whopping 11 years!

The most recent run started around 2011 and has been going on .. it's a wild ride up to $2000 as of last close.

Very easy to have predicted this back in '99, right? Wish it was that easy, then we all would be Bezos I guess.

So, is it a great idea to invest at $2000 a large chunk of money. Go ahead and figure out for yourselves. Time will tell. Me, I invested the money in diversified mutual funds and followed passive investment strategy that earned me may be 8% return since '99. I have focused on keeping costs low, saving regularly, and investing often. I have made over seven figures thanks to the good fortunes in the market and the level headed strategy.

Could I be boasting of owning Amazon shares at a cocktail party and claiming to be an investing genius. You betcha! I only needed to hold on to those shares with unwavering conviction for nearly 20 years, with 11 of those years not making a profit. Do I miss that, not one bit.

I have what matters the most, enough!
Last edited by Elysium on Mon Sep 03, 2018 6:23 pm, edited 4 times in total.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by H-Town » Mon Sep 03, 2018 6:12 pm

steve321 wrote:
Mon Sep 03, 2018 2:31 pm
I am currently indexing but I am having more and more doubts about my strategy. I have voiced some of my doubts in my thread on Mr West. I am now contemplating the possibility of putting a big chunck of money in Amazon and Alphabet (say 1M£ in each). Here's the reason
1. Alphabet has been compared to a tech stock ETF, because they invest in many small tech companies (besides Google). So it's quite diversified.
2. I've had some experience with Amazon as a customer and I realised that unlike other companies, that are interested in making a quick buck, Amazon is building for the long term future. They want to please you as a customer like nobody else does, it doesn't matter if they lose money through refunding you (no questions asked). This long term mentality is hugely impressive, I think they are set to conquer the world.
So what can go wrong with this? What's the Bogleheads' reason for avoiding such investment style? Alphabet in particular is quite diversified; and Amazon is a formidable business.
Thank you but not interested.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 6:14 pm

H-Town wrote:
Mon Sep 03, 2018 6:12 pm
steve321 wrote:
Mon Sep 03, 2018 2:31 pm
I am currently indexing but I am having more and more doubts about my strategy. I have voiced some of my doubts in my thread on Mr West. I am now contemplating the possibility of putting a big chunck of money in Amazon and Alphabet (say 1M£ in each). Here's the reason
1. Alphabet has been compared to a tech stock ETF, because they invest in many small tech companies (besides Google). So it's quite diversified.
2. I've had some experience with Amazon as a customer and I realised that unlike other companies, that are interested in making a quick buck, Amazon is building for the long term future. They want to please you as a customer like nobody else does, it doesn't matter if they lose money through refunding you (no questions asked). This long term mentality is hugely impressive, I think they are set to conquer the world.
So what can go wrong with this? What's the Bogleheads' reason for avoiding such investment style? Alphabet in particular is quite diversified; and Amazon is a formidable business.
Thank you but not interested.
interested in what?

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by HEDGEFUNDIE » Mon Sep 03, 2018 6:15 pm

Broken Man 1999 wrote:
Mon Sep 03, 2018 5:39 pm
Cisco broke my heart not once, but twice. :oops:
Now it’s up 50% in the last 12 months. Third time’s the charm? :beer

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by inbox788 » Mon Sep 03, 2018 6:18 pm

No, no, no! You're looking backwards at past performance. You have to look towards the future and invest in Tesla and Netflix! Tesla will not only take over the auto industry, but also the energy sector. And if they take over Uber in a hostile takeover, they'll fully control the transportation industry. Netflix will take over the entertainment industry and someday grow to be bigger than Comcast and Disney combined. Or not.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by steve321 » Mon Sep 03, 2018 6:20 pm

inbox788 wrote:
Mon Sep 03, 2018 6:18 pm
No, no, no! You're looking backwards at past performance. You have to look towards the future and invest in Tesla and Netflix! Tesla will not only take over the auto industry, but also the energy sector. And if they take over Uber in a hostile takeover, they'll fully control the transportation industry. Netflix will take over the entertainment industry and someday grow to be bigger than Comcast and Disney combined. Or not.
Can't understand Netflix. If it weren't for Better call saul and Ozark, it would be useless to us. What's the big deal??!! Amazon Prime has got comparabale shows, plus sooo much more. No contest for me.

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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by arcticpineapplecorp. » Mon Sep 03, 2018 6:40 pm

steve321 wrote:
Mon Sep 03, 2018 3:54 pm
arcticpineapplecorp. wrote:
Mon Sep 03, 2018 3:51 pm

The people you're buying the shares from therefore think the stock price will go down in the future, while you think it will go up. Only one will be right.
yeah but doesn't the same idea apply to indexing? You also buy individual shares when you index, so someone must be selling them.
You may buy shares, but it's shares in thousands of companies not one or two. And you're not buying shares in the companies themselves. You're buying shares in an index fund. The index fund holds shares of stocks, but you do not own them directly. You are an indirect investor of stocks. The shares you buy (of the index fund) are from the grandmother who's selling her shares to get dollars to spend in retirement. The reason you buy shares of the market (index) is because over time the market has gone up. If you expect the economy of the planet to continue on that trend, then you happily buy shares in the total market to share in that prosperity over time. Individual stocks may or may not be part of that prosperity.
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by H-Town » Mon Sep 03, 2018 6:44 pm

steve321 wrote:
Mon Sep 03, 2018 6:14 pm
H-Town wrote:
Mon Sep 03, 2018 6:12 pm
steve321 wrote:
Mon Sep 03, 2018 2:31 pm
I am currently indexing but I am having more and more doubts about my strategy. I have voiced some of my doubts in my thread on Mr West. I am now contemplating the possibility of putting a big chunck of money in Amazon and Alphabet (say 1M£ in each). Here's the reason
1. Alphabet has been compared to a tech stock ETF, because they invest in many small tech companies (besides Google). So it's quite diversified.
2. I've had some experience with Amazon as a customer and I realised that unlike other companies, that are interested in making a quick buck, Amazon is building for the long term future. They want to please you as a customer like nobody else does, it doesn't matter if they lose money through refunding you (no questions asked). This long term mentality is hugely impressive, I think they are set to conquer the world.
So what can go wrong with this? What's the Bogleheads' reason for avoiding such investment style? Alphabet in particular is quite diversified; and Amazon is a formidable business.
Thank you but not interested.
interested in what?
Not interested in what you're selling, which is putting 2M£ in two single stocks.

Dude! You won the game. Stop trying to gamble your wealth away.

staythecourse
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by staythecourse » Mon Sep 03, 2018 6:45 pm

steve321 wrote:
Mon Sep 03, 2018 4:37 pm
staythecourse wrote:
Mon Sep 03, 2018 4:28 pm
Tycoon wrote:
Mon Sep 03, 2018 2:37 pm
If putting your money in Alphabet and Amazon is something that you feel strongly about, do it. The best lessons in life are learned the hard way. I hope it turns out well.
Correct. I tell this to my own toddlers. You tell them the logic and if they still don't want to learn BEFORE hand then they have to learn it AFTER the fact. Either way they will hopefully learn the lesson, but then again folks make the same mistake over and over again.

Good luck.
yea but I am not a toddler. I have granchildren so I see what you mean, but I don't need to be taught the same way as them thanks. Btw I have made loads more by investing in the right rental properties than I would have made if I'd invested in the stock market.
So I must have done something right...
Just because you are a grandfather doesn't mean you are immune to the same advice that is applicable to a kid. I'm a physician and see PLENTY of folks of ALL ages make the same mistakes. That is the point of behavioral mistakes is that intelligence or age (in you opinion) does not make you exempt.

BTW, looks like you have not learned over the years. Presumably one of the reasons you DIVERSIFIED away from rental properties even though you admit you made better returns was to prevent "all the eggs in one basket" idea. Then you ask the same question that INCREASES your risk of "all your eggs in one basket". Does that make sense?

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

jalbert
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by jalbert » Mon Sep 03, 2018 6:51 pm

The main thing wrong is that you would be taking unsystematic risk. Because this risk is diversifiable, you are not compensated for taking this risk. Until this concept is fully understood, you would be taking uncompensated risk you don’t understand by making a highly concentrated investment in two tech stocks.

I may be wrong but it appears that a secondary thing wrong is that you may be looking at recent past results, assuming they will continue, and constructing a narrative to convince yourself this is a well reasoned decision. This emotional phenomenon is pervasive and often leads to individual investors achieving inferior results.
Risk is not a guarantor of return.

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LadyGeek
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Re: What's wrong with putting most of my money into two stocks: Alphabet and Amazon?

Post by LadyGeek » Mon Sep 03, 2018 7:02 pm

I removed an off-topic post and several comments. This thread has run its course and is locked (topic exhausted, derailed / contentious). See: Locked Topics
Moderators or site admins may lock a topic (set it so no more replies may be added) when a violation of posting policy has occurred. Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.
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