How do Bogleheads cope with FOMO? [Fear Of Missing Out]

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samsoes
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Re: Need reassurance - having FOMO

Post by samsoes »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
What is FOMO?
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Stinky
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Re: Need reassurance - having FOMO

Post by Stinky »

If you want to invest in individual stocks with some small amount (like 5% of your portfolio), go right on ahead. Many, but by no means all, Bogleheads seem to do that based on prior threads on this Board.

Just keep rigorous records of both your "winners" AND your "losers". The human mind tends to remember the good investments and forget the bad ones, and you'll want to have an accurate record of just how you did.

Just realize that if you're limiting your investment in individual stocks to a small amount like 5%, the performance of those stocks won't have a material impact on your overall results. That's the reason that a lot of Bogleheads (myself included) don't bother with individual stocks.
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sambb
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Re: Need reassurance - having FOMO

Post by sambb »

i know many tsla millionaires. and apple, others. theyve done VERY well..
Dontwasteit
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Re: Need reassurance - having FOMO

Post by Dontwasteit »

samsoes wrote: Mon Nov 23, 2020 6:55 am
Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
What is FOMO?
FOMO...Fear of missing out.
mr_brightside
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Re: Need reassurance - having FOMO

Post by mr_brightside »

celia wrote: Mon Nov 23, 2020 6:52 am Some of us set aside some "fun money" that we can afford to lose. It is generally less than 10% of our assets. So, if you can afford to take the risk, go for it. (I use a small part of my Roth for individual stocks.)
:wink:
this is pretty much where I'm at. use a Roth IRA brokerage account to trade a bit -- under 10% of invested retirement assets

the rest is in index / target retirement / diversified mutual funds

-----------------------------------------------
remember Enron?? I do
nguy44
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Re: Need reassurance - having FOMO

Post by nguy44 »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
Always remember that the "winners" will be heavily publicized and bragged about by those who got lucky, but no one (which is a larger group) will ever brag about losing large amounts in individual stocks.

It is find to set aside some money (in my opinion 1%-5%, depending on your level of risk tolerance) to play with invest stocks. But better to look at it as "gambling money", and assess how would you feel if you lost all or most of it. If you can tolerate that, fine.

My individual stocks are about 1.5% of my investments.
gonefishing01
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Re: Need reassurance - having FOMO

Post by gonefishing01 »

If you enjoy researching and following individual companies then by all means go for it. If you don’t enjoy the work and just after some alpha, I’d stick with the index funds. There is FOMO on the other side when your picks aren’t working out and the indexes keep on steadily climbing too.
MathIsMyWayr
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Re: Need reassurance - having FOMO

Post by MathIsMyWayr »

celia wrote: Mon Nov 23, 2020 6:52 am Some of us set aside some "fun money" that we can afford to lose. It is generally less than 10% of our assets. So, if you can afford to take the risk, go for it. (I use a small part of my Roth for individual stocks.)
:wink:
If your 10% makes it big, really big like TSLA 85x, now it is over 90%. What would you do? :wink:
gregwils
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Re: Need reassurance - having FOMO

Post by gregwils »

Around 2001, back when I was still a genius investor, I had two large positions (large for me). One was American Tower, the other was Level 3. I had 15,000 shares of AMT at around $2 each, they are a wireless tower owner. Level 3 was a backbone communications company, wanting to be the carrier's carrier. This was just a few years after the '96 Telecommunications Act. I think I had about 10,000 shares of stock with perhaps a $3valuation. I don't remember for sure as I try to block it out.

I ended selling all of my AMT at $6 or $7 so I could concentrate on LVLT, because that stock was going to explode....or so I thought :x . Fast forward twenty years. LVLT went sideways for about ten years before they merged and became yet another big bloated carrier. AMT stayed independent and is now at $232. Yep, my position would have been about $3.5M. Instead, I am 63 and still working. I would have been far, far better off in a broad market index fund.

If you have a small position to play, go for it. However, FOMO can be a slippery slope - just a little more, just a little more. Everyone wants to hit a grand slam, but frankly most games are won by hitting lots of singles. Don't get me wrong, a lot of people made a lot of money with AMT, but it's a fools game to attempt to predict the future. High risk pays great rewards, but can also come at a steep price.

My $.02.
burritoLover
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Re: Need reassurance - having FOMO

Post by burritoLover »

If you are willing to spend hundreds upon hundreds of hours understanding how the market works, how to evaluate a company, learning the dynamics of every asset class and sector you wish to invest in, then there's a very slight almost infinitesimal chance that you will even be able to slightly outperform the S&P 500 over the long haul.
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Dandy
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Re: Need reassurance - having FOMO

Post by Dandy »

there will always be I wish I'd invested in "X" that went up thousand % stocks. Don't be lured into that game.

Have a decent equity/fixed income allocation, invest a decent % of your earnings, rebalance when needed and don't get distracted.
charis23
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Re: Need reassurance - having FOMO

Post by charis23 »

gregwils wrote: Mon Nov 23, 2020 8:47 am Around 2001, back when I was still a genius investor, I had two large positions (large for me). One was American Tower, the other was Level 3. I had 15,000 shares of AMT at around $2 each, they are a wireless tower owner. Level 3 was a backbone communications company, wanting to be the carrier's carrier. This was just a few years after the '96 Telecommunications Act. I think I had about 10,000 shares of stock with perhaps a $3valuation. I don't remember for sure as I try to block it out.

I ended selling all of my AMT at $6 or $7 so I could concentrate on LVLT, because that stock was going to explode....or so I thought :x . Fast forward twenty years. LVLT went sideways for about ten years before they merged and became yet another big bloated carrier. AMT stayed independent and is now at $232. Yep, my position would have been about $3.5M. Instead, I am 63 and still working. I would have been far, far better off in a broad market index fund.

If you have a small position to play, go for it. However, FOMO can be a slippery slope - just a little more, just a little more. Everyone wants to hit a grand slam, but frankly most games are won by hitting lots of singles. Don't get me wrong, a lot of people made a lot of money with AMT, but it's a fools game to attempt to predict the future. High risk pays great rewards, but can also come at a steep price.

My $.02.
Great story, thanks for sharing. Keeps me humble even as I've been wanting to scratch the 'owning individual stocks' itch lately.
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Re: Need reassurance - having FOMO

Post by geerhardusvos »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
If you have invested in VTSAX, how could you have any regrets?
VTSAX and chill
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celia
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Re: Need reassurance - having FOMO

Post by celia »

MathIsMyWayr wrote: Mon Nov 23, 2020 8:36 am
celia wrote: Mon Nov 23, 2020 6:52 am Some of us set aside some "fun money" that we can afford to lose. It is generally less than 10% of our assets. So, if you can afford to take the risk, go for it. (I use a small part of my Roth for individual stocks.)
:wink:
If your 10% makes it big, really big like TSLA 85x, now it is over 90%. What would you do? :wink:
If my money on individual stocks were to double or triple, I would sell enough to cover my original investment, and let my "gains" carry on...
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HomerJ
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Re: Need reassurance - having FOMO

Post by HomerJ »

sambb wrote: Mon Nov 23, 2020 6:59 am i know many tsla millionaires. and apple, others. theyve done VERY well..
Do you know anyone with a time-machine?

So the OP asks for reassurance... what exactly are you telling him with this post? Do you think he should try to find the next Apple?
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HomerJ
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Re: Need reassurance - having FOMO

Post by HomerJ »

nguy44 wrote: Mon Nov 23, 2020 8:10 am Always remember that the "winners" will be heavily publicized and bragged about by those who got lucky, but no one (which is a larger group) will ever brag about losing large amounts in individual stocks.
This.

Yes, if you pick the correct stocks, you can make more than the market. Maybe a ton more.

If you pick the wrong stocks, you can make less than the market. Maybe even lose it all.

Index funds get you the market return with zero work. No more, but just as important, no less.

7%-8% will make one rich over time.

Or, you can do a ton of work and maybe get rich faster, or maybe slower, or... scary... not get rich at all.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
bugleheadd
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Re: Need reassurance - having FOMO

Post by bugleheadd »

i am enjoying playing SPY or SPX calls with fun money, added about 20% to my net gains so far this year. its well diversified and less risky than individual stock plays. buying spy or spx calls can be such a easy play sometimes when markets down 1-2%, you just buy calls, and it goes up. also dont go all in, save some bullets to average down. i also got burned by single stocks many times so i avoid single stocks.
Last edited by bugleheadd on Mon Nov 23, 2020 4:22 pm, edited 2 times in total.
02nz
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Re: Need reassurance - having FOMO

Post by 02nz »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
Funny how you don't hear about stocks going to zero. Yet they do, all the time.
Jimsad
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Re: Need reassurance - having FOMO

Post by Jimsad »

Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
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JonnyDVM
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Re: Need reassurance - having FOMO

Post by JonnyDVM »

Jimsad wrote: Mon Nov 23, 2020 5:52 pm Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
Much like the Bitcoin millionaires this isn’t exactly a forum they frequent. OP there’s no law you have to exclusively index. Take 5% of your portfolio and invest it in whatever you want. If you hit a grand slam you reap nice benefits. If you fail miserably your downside is limited.
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samsoes
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Re: Need reassurance - having FOMO

Post by samsoes »

Dontwasteit wrote: Mon Nov 23, 2020 7:01 am
samsoes wrote: Mon Nov 23, 2020 6:55 am
Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
What is FOMO?
FOMO...Fear of missing out.
Thanks.
Non-intuitive acronyms are ubiquitous on this site.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)
neverdone
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Re: Need reassurance - having FOMO

Post by neverdone »

Jimsad wrote: Mon Nov 23, 2020 5:52 pm Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
I am not a Tesla millionaire, but have done well.
I bought 100 shares @150 when I took delivery of my Model X in March 2016.
In my HSA. I am just holding on to the stock. 17X return (so far). I will just hold and see how it goes. It is quite a ride.
Retired last year; all my IRA, retirement money is in stock index/bond funds.
see viewtopic.php?p=5601193#p5601193
DIYtrixie
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Re: Need reassurance - having FOMO

Post by DIYtrixie »

Jimsad wrote: Mon Nov 23, 2020 5:52 pm Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
Not a millionaire but TSLA has been part of my Roth ‘fun money’ allocation since 11/16. When it hit 10x over my purchase price, I sold enough shares to cover 2x my total initial investment. Hanging onto the rest for now — bought a Model 3 about a year ago and I’m now even more impressed with what Musk is trying to do.
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camillus
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Re: Need reassurance - having FOMO

Post by camillus »

What’s the only way to guarantee you own the next Tesla?

VTSAX

Beware survivor bias.
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SquirrelEater
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Re: Need reassurance - having FOMO

Post by SquirrelEater »

The “experts” can’t consistently pick the FOMO stocks prior to them being worthy of FOMO status. There are swarms/teams/companies of people significantly brighter than I, who obsess over the market, went to fancy pants Ivy League schools, learned Latin as a toddler, and yet can’t consistently beat FSKAX/ITOT/VTSAX performance to save/grow their “wealth typically lasts only three generation” portfolio.

If these people are so awesome stock pickers I want screenshots of their portfolio or their thumb to unlock their phone so my own eyes can pour over their “great performances.” Show me the cost basis in person! I know my way around the Fidelity app. Show me punk! I’m going to embarrass you as a lair and be confrontational if you don’t log in right now! :-P
Show me your Tesla’s car title too. I want to see that it lacks a lien with your 600x returns.

Index is the easiest way to get the most returns for so little effort. Like 80/20 rule. 1% doing it. 19% sticking to it.

WallStreetBets is a great place to vent your FOMO.
Samosa22
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Re: Need reassurance - having FOMO

Post by Samosa22 »

Jimsad wrote: Mon Nov 23, 2020 5:52 pm Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
Not a millionaire and not invested in Tesla but I can certainly relate to your FOMO. A few months ago I myself, fueled by FOMO, ended up investing in NIO and NKLA. The goal was that if prices go up I will sell enough shares to regain my principal and keep the rest invested until they reach either 100X or 0.00X of the purchase price. Long story short, as NIO kept going up and up I kept buying more, sold NKLA at 50% loss and used the proceeds (and additional money by cutting in half my emergency fund) and bought XPEV and Li auto too. Its a crazy ride. I was 100% US stocks a few months ago and now all of a sudden my portfolio is 45% emerging markets individual stocks. I haven't done calculations but I think combined returns are at least ~3x of my original investment amount. The portfolio has grown significantly but it is all on paper since I haven't realized any gains. And honestly, I am finding it very hard to sell these stocks. New plan is to sell enough to recover the principal when/if price reaches 5X and then sit back and watch. Or may be the highest price point was today and its all downhill from here. I hope not.

Disclaimer; I am newbie, started investing about a year ago, so make of it what you will.
Diversification is protection against ignorance - WB.
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arcticpineapplecorp.
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Re: Need reassurance - having FOMO

Post by arcticpineapplecorp. »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
which stocks?

if you say the ones you named, remember you can't get those juicy returns you quote. They're in the past.

so what makes you think you'd get the same returns from these stocks going forward?

People do though. And they jump in, buying high after the stock has already gone up.

because, as you say, they fear "missing out."

news flash: you've already missed out on those juicy returns.

so don't fear it. acknowledge it. embrace it.

and realize if you knew enough to get those returns, you would've got those returns.

but you didn't. because you couldn't.

what makes you think you can now if you couldn't then?

generally future returns are lower when you buy high. Future returns are higher when you buy low. Ask yourself if you're buying high or low?

You may say those stocks mentioned are only examples.

but the problem is you (and everybody) name the darlings...after they've become the darlings, right?

The goal is to find the next darlings....before they become darlings.

how easy do you think that is?

if it was so easy, wouldn't everyone do it?

if it was easy to pick the best stock, wouldn't there only be one stock that everyone would buy and no others?

could it just be dumb luck that people got rich?

should you confuse strategy with outcome?

Don't people who do this think they're smart because they got rich?

Are they? or were they just lucky?
Last edited by arcticpineapplecorp. on Mon Nov 23, 2020 11:26 pm, edited 1 time in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
flyingcows
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Re: Need reassurance - having FOMO

Post by flyingcows »

If you want to gamble, you don’t need to limit yourself to individual stocks, stonks (tsla, nio), or flavor of the month cypto tokens.

With options you can construct highly leveraged bets on the direction of indexes

My 0.02 is that, someone with no risk mangament and a lucky play such as having early success with a bet on something like bitcoin is going to be a net negitive for the gambler long term. As emotionally, they find it hard to not make such bets in the future. Sooner or later, one or two risky plays that do not pan out could wipe them out
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galawdawg
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Re: Need reassurance - having FOMO

Post by galawdawg »

Jack Bogle said:
The two greatest enemies of the equity fund investor are expenses and emotions.'
Investing based upon FOMO is investing based upon emotion.
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JoeRetire
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Re: Need reassurance - having FOMO

Post by JoeRetire »

Jimsad wrote: Mon Nov 23, 2020 6:37 am Should I invest in individual stocks too to some extent ?
No. Learn to be happy with what you have. Otherwise, you'll always feel this "Fear".
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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beernutz
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Re: Need reassurance - having FOMO

Post by beernutz »

Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
If you own total market index funds you haven't missed out on anything because you own TSLA and Moderna.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. --Will Rogers
Nimer
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Re: Need reassurance - having FOMO

Post by Nimer »

Jimsad wrote: Mon Nov 23, 2020 5:52 pm Can any of the Tesla millionaires chime in to let us know how they did and if they are still hanging in or selling out ?
I didnt know anything about Tesla but my wife wanted one bad so I bought her a Model 3 for x-mas in 2018! Drove the car and was amazed and WOWED!! few months later I liked the car so much so I went looked the company and its stock up and loaded it up on it summer 0f 2019 Bought my TSLA shares average for $170-175! each share is worth about $2500

I tried to do something nice for the wife and got rewarded big time :)
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HomerJ
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Re: Need reassurance - having FOMO

Post by HomerJ »

arcticpineapplecorp. wrote: Mon Nov 23, 2020 8:44 pm
Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
which stocks?
This is a great way to answer the question.

OP, write down the stocks you think are going to go up 10x in the next couple of years, and see if you're right.

Heck, write them down here in this thread.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
sjl333
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Re: Need reassurance - having FOMO

Post by sjl333 »

All,

I want to play devil's advocate to the boglehead philosophy.

As an avid follower of this forum, I feel like I may have been a bit too "brain-washed" into following the philosophy of low cost index funds that gets preached on these forums.

I am no market genius, still feel like a newb, but I would pose the question - could SP500 indexing be a bit outdated? I pose this question not too start any controversy or offend anybody here, but more to pose as a starting point for discussion.

The very simple argument that I would make on why the SP500 index could be possibly outdated is simply this: The pace of technological innovation is occurring at such a rapid rate, we have EVs, Self-driving, AI/Machine learning, Space Exploration, Gene Editing / CRISPR as well as other high-tech fields coming into play, creating new industries (e.g. EVs) and disrupting the old way of doing things. The companies that innovate the fastest will tend to dominate the market (e.g. Tesla / Nio / NVIDIA / AMD), while leaving the companies that do not innovate in the dust.

So as a boglehead indexer, I feel major FOMO as well as some regret. As a relatively young person (31), I have decided to stray from the boglehead way and have started to invest in individual stocks. I have kept most of my 401K money in SP500, but will be soon changing my elections to a high growth ETF (FDGRX / FBGRX). As for my rIRA / taxable accounts, I have invested all my money into individual stocks. I was initially 100% SP500, but last year (or early this year) cant remember, I invested all my money into NVIDIA because I believed in this company, long term. It has far outpaced the SP500 returning 100%. I definitely feel major FOMO with the EV stocks (Tesla / XPENG) so I recently started to invest in those as well. Obviously, wish I could have gotten in sooner.

Anyhow, as someone that is still relatively young, I am okay with taking these gambles, and I am 100% fine with the risks. Who knows, I may, in the long run, underperform the SP500, but I am okay with that.

In summary, there's many ways to Rome, some go with 100% indexing all the way, and other's go with 100% individual stock picking. There is no definitive right answer to this. There are many people who got their both ways or somewhere in between. If you are okay with the risks involved with stock picking, if you have done your HW and research, and you believe in the company your about to invest in, I don't see any issues with it. I came to the conclusion that I am okay with it and have been going full on 100% stock picking for the past year with some nice returns.

But dont worry - I will still stick around here to learn and gain wisdom from all of you, cheers :beer
corp_sharecropper
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Re: Need reassurance - having FOMO

Post by corp_sharecropper »

Stinky wrote: Mon Nov 23, 2020 6:57 am If you want to invest in individual stocks with some small amount (like 5% of your portfolio), go right on ahead. Many, but by no means all, Bogleheads seem to do that based on prior threads on this Board.

Just keep rigorous records of both your "winners" AND your "losers". The human mind tends to remember the good investments and forget the bad ones, and you'll want to have an accurate record of just how you did.

Just realize that if you're limiting your investment in individual stocks to a small amount like 5%, the performance of those stocks won't have a material impact on your overall results. That's the reason that a lot of Bogleheads (myself included) don't bother with individual stocks.
Do options, just buying/long, if it's just "FOMO" issues/money. Less capital necessary/at-risk for a chance at the kind of gains that will scratch a FOMO itch.
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HomerJ
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Re: Need reassurance - having FOMO

Post by HomerJ »

sjl333 wrote: Tue Nov 24, 2020 12:30 amThe very simple argument that I would make on why the SP500 index could be possibly outdated is simply this: The pace of technological innovation is occurring at such a rapid rate, we have EVs, Self-driving, AI/Machine learning, Space Exploration, Gene Editing / CRISPR as well as other high-tech fields coming into play, creating new industries (e.g. EVs) and disrupting the old way of doing things. The companies that innovate the fastest will tend to dominate the market (e.g. Tesla / Nio / NVIDIA / AMD), while leaving the companies that do not innovate in the dust.
Investing in Total Stock Market Index Fund gets you access to all these companies, and you don't have to pick the winners.
I invested all my money into NVIDIA because I believed in this company, long term.
Good luck... "Believing" in a company is not a great reason to invest in a single company. A company can make great products and still fail to make outsize profits. But glad it worked for you.
Anyhow, as someone that is still relatively young, I am okay with taking these gambles, and I am 100% fine with the risks. Who knows, I may, in the long run, underperform the SP500, but I am okay with that.
You may outperform the SP500. Most do not. Long-term, it's pretty hard. This is just facts. But some do. And you may be one of them.
In summary, there's many ways to Rome, some go with 100% indexing all the way, and other's go with 100% individual stock picking. There is no definitive right answer to this.
Ehh... We'll have to agree to quibble. Index investing, so far, makes you rich slowly, with little effort on your part.

Investing in individual stocks, so far, for most people, makes you less rich, or not rich at all. And with a lot of effort (unless you just pick stocks with zero research because you like their products - I suppose that's pretty easy too).

But it does make SOME people rich quickly, or far more rich than just plain old index investing. So it may indeed work for you.

Just note that probably 80% or 90% of old guys here started out EXACTLY like you, picking individual stocks because we thought we could pick the good stocks and avoid the bad stocks... You don't think those of us who were around at the dawn of the Internet age didn't say "Wow things are changing fast, I bet I could pick the winners because I'm young and smart and understand tech"?

MOST of us said that.. And most of us were wrong, and ended up as index investors.

But a few can indeed out-perform for years and years and years... Maybe you'll be one of them... Good luck!
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
kareysue
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Re: Need reassurance - having FOMO

Post by kareysue »

It is better than holding ee bonds or ibonds which is what i have most of. Haven't made much of anything
BNAIBOA
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Re: Need reassurance - having FOMO

Post by BNAIBOA »

I think it depends on your financial situation and risk tolerance. I bet big on NIO and it is on its way to eclipsing my entire 401 k.

I used to put all my money into index funds but I am no longer doing that because 1) I make $300 k a year and I own rental properties (have other assets); 2) there is no longer a transaction fee; 3) easy access to information. I am comfortable with taking some risks for superior returns. You have to know yourself and how much risk you can handle.
Last edited by BNAIBOA on Tue Nov 24, 2020 6:10 am, edited 1 time in total.
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4nursebee
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Re: Need reassurance - having FOMO

Post by 4nursebee »

If you have not internalized the lessons here I would suggest buying individual stocks.

Beware! There is something along the lines of a bell curve of performance and returns. Most people end up in the middle with minimal to no extra effort. Some shoot for outsize returns and end up with bankruptcy. Choose your end goal wisely and take proper action, enjoy your results.

My failures in the market (and life) taught me much more than success.
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hagridshut
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Re: Need reassurance - having FOMO

Post by hagridshut »

Much of the focus on Bogleheads is about the $ returns, but there's not much discussion about the collateral costs of those returns.

NVDA is a good example:
sjl333 wrote: Tue Nov 24, 2020 12:30 amI invested all my money into NVIDIA because I believed in this company, long term. It has far outpaced the SP500 returning 100%.
NVDA has had incredible gains, about 2x this year and 15-16x over the past 5 years. I agree in part with sjl333 that if one has specialized knowledge and high conviction in a company, it is possible to make an excellent investment that does much better than the broader market.
Jimsad wrote: Mon Nov 23, 2020 6:37 am I invest in broad index funds and have gotten about 7-8% returns over last 10 years
Have resisted the temptation to invest in individual stocks but when I hear things like 10k invested in Tesla in 2011 is now worth 850k and I see Moderna , bitcoin etc. surging, I am having second thoughts
Should I invest in individual stocks too to some extent ?
However, the potential for incredible gains has to be weighed against volatility, and one's personal tolerance for huge swings in market value.

NVDA lost over 50% of its market value in the last quarter of 2018. The stock eventually recovered by April 2020, and has since soared to new heights, but it was a painful 18 month wait.

It's difficult if not impossible to convey the kind of stress this may induce. Many people experience high anxiety and a lot of lost sleep. Some deal with it better than others. Consider carefully how you might feel if a particular investment, even a good one you believe in, loses 50% or of its market value in a short amount of time.

The question everyone must ask, is whether they are willing and able to withstand intense mental pressure in the face of individual stock price risk.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio
runninginvestor
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Re: Need reassurance - having FOMO

Post by runninginvestor »

For me, Fear of Missing Out is a better feeling (not acted upon) than the stress of watching my "sure thing" picks rise then tank.

As others, I have a small % in an old rollover IRA* that I scratch the trading itch with. If it lost 90%, it'd be the same as a bad trip to Vegas.

* Some people prefer to do it in their Roth account bc if you got it big, you won't pay taxes.
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dziuniek
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Re: Need reassurance - having FOMO

Post by dziuniek »

Here's some moonshots:

XPEV, NIO, BLNK, PLTR, SPCE etc...

Have a go :)
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JoMoney
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Re: Need reassurance - having FOMO

Post by JoMoney »

I'm not going to tell you that you shouldn't buy lottery tickets, it's not illegal, some people enjoy the thrill of it. Odds show that someone will win, but the cost to many across time will be much larger.
If you don't play the game, but you watch it, there is some chance that you'll see some 'winner' that you 'knew' you should have picked and regret not doing so... also likely that you'll forget about the 'losers' you would have picked that never did anything, confounding the regret of the one you missed.
But the chances are high the money would be better put to some other purpose then chasing long-shots. Little mistakes over time add up to big mistakes, one extra dessert doesn't make anyone fat, but if you keep digging little holes you'll find yourself in a big hole pretty quick.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
BNAIBOA
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Re: Need reassurance - having FOMO

Post by BNAIBOA »

You can buy a stock that represents a big portion of the economy like Amazon, Alibaba. It doesn’t have to be a highly speculative stock.
vas
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Re: Need reassurance - having FOMO

Post by vas »

sjl333 wrote: Tue Nov 24, 2020 12:30 am The very simple argument that I would make on why the SP500 index could be possibly outdated is simply this: The pace of technological innovation is occurring at such a rapid rate, we have EVs, Self-driving, AI/Machine learning, Space Exploration, Gene Editing / CRISPR as well as other high-tech fields coming into play, creating new industries (e.g. EVs) and disrupting the old way of doing things. The companies that innovate the fastest will tend to dominate the market (e.g. Tesla / Nio / NVIDIA / AMD), while leaving the companies that do not innovate in the dust.
This is eerie; are you actually me in 1998?
There is nothing you can't prove if your outlook is sufficiently limited
Samosa22
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Re: Need reassurance - having FOMO

Post by Samosa22 »

dziuniek wrote: Tue Nov 24, 2020 9:22 am Here's some moonshots:

XPEV, NIO, BLNK, PLTR, SPCE etc...

Have a go :)
Li auto is another potential winner.
Diversification is protection against ignorance - WB.
IMhooked
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Re: Need reassurance - having FOMO

Post by IMhooked »

My thoughts as an index investor...I'll own Tesla stock soon enough inside the index once they come in. If they continue to innovate and trend in a positive fashion, I'll reap "some" rewards through the aggregate in owning a portion of Tesla inside the index. If they trend the other way, they get washed out and I keep receiving the index return of those that are performing according to the index criteria.

DW and I prefer to 'bet' on the combined successes (and failures) inside the effort as it represents the innovation, advancement, etc. of the larger economy versus the innovation and advancement of a single company. If Tesla does it better than someone else in the index...Bring 'em in!

As simple index investors we're not far from reaching our goals (2-5 years) She's currently 28 and I'm 45. It's more about the focus on what you want the goal line to look like as well as the corresponding savings rate needed to get there. Missing out on those two aspects (end number and savings rate) even earlier in life would be our FOMO if we ever have it.

Reading Annie Duke's book about the concept of "resulting" reframes with great perspective, how individuals sort through emotions in decision making. Addresses attitudes and logical thinking around hindsight as well. Great read for FOMO folks of all kinds :) I will say, however, never stop questioning and wondering. Makes life fun to think about what is still possible! Good luck!
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HomerJ
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Re: Need reassurance - having FOMO

Post by HomerJ »

hagridshut wrote: Tue Nov 24, 2020 9:08 am However, the potential for incredible gains has to be weighed against volatility, and one's personal tolerance for huge swings in market value.

NVDA lost over 50% of its market value in the last quarter of 2018. The stock eventually recovered by April 2020, and has since soared to new heights, but it was a painful 18 month wait.

It's difficult if not impossible to convey the kind of stress this may induce. Many people experience high anxiety and a lot of lost sleep. Some deal with it better than others. Consider carefully how you might feel if a particular investment, even a good one you believe in, loses 50% or of its market value in a short amount of time.

The question everyone must ask, is whether they are willing and able to withstand intense mental pressure in the face of individual stock price risk.
The difference between "mental pressure" from a crashing stock and a crashing market is pretty big. There is a real risk with an individual stock that it will go down, and stay down, or even go bankrupt. Individual companies don't win forever.

A new competitor shows up, and your chosen stock goes down 50%, and maybe the right thing to do is sell.

So far, selling has never been the right thing to do with the broad market, but knowing when to sell a failing stock is an ESSENTIAL part of the skill of stock-picking.

It's not the "mental pressure" of "I just need to hold on and everything should be okay in the long-run". It's the "mental pressure" of "Things change for individual stocks. It may indeed be time to sell this one... Or maybe not. How to know?!!!"
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
deltaneutral83
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Re: Need reassurance - having FOMO

Post by deltaneutral83 »

I don't just have FOMO, I have ROMO (reality of missing out) of not indexing sooner in my investing life. The funny thing is that I never have a peer bend my ear about the 80-90% drawdown of their picks, but got plenty of chatter on the way up. FAANG and Tesla are the current darlings. While the bankruptcies of all the big boys we've heard about are worthy of headlines, the idea that something like 90+% of publicly listed stocks don't keep up with their respective benchmark is sobering.

The PE ratio of tech stocks in 1999 is still multiples of what it is today though. I don't see the FAANG crowd getting hurt too badly, but I'm fine with the huge chunk they already take up in the TSM. Really only AMZN has a PE ratio that stand out against the TSM at 91x. I think FB, AAPL, and GOOG are all under 35x currently. TSLA is obviously more speculative.
3funder
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Re: Need reassurance - having FOMO

Post by 3funder »

Do what you want, but stay away from the best companies of a bad lot (in this case, oil explorers and producers). That is a value trap if I ever saw one.
Global stocks, US bonds, and time.
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