Hacker News Reader

Comment by dralley | Hacker News Reader

I've done well (39% annual returns) investing in 2-3 individual stocks in addition to index funds for the rest of my investments. More than that would be IMO too much to pay attention to.

Admittedly my choices for stocks are a bit on the high-risk side, but it's worked out well so far. Picking up lots of AMD in 2017, and Rivian 6 weeks ago, seems to have been decent calls.

View on HN

Have thought to start your own fund? If what you say is true (which I doubt), you can make squillions in fees.

Sorry but I never believe these online claims given with no evidence about ridiculously high returns. It’s not to say you are lying but it’s easy to miscalculate these things.

Anecdotally I can confirm there's been a few 40% years in the past decade, but it really is a gamble, and because of survivorship bias it's easy to only hear about the ones that gained and not the ones that lost.

I started my investing journey about 5 years ago, started with stock picking, and my average yearly return is... 4.5% p.a. I would've 100% been better of investing in a low fee index fund, like S&P500 (VOO), or even just a world ETF like VT.

I picked some winners, like Microsoft / Google, both up 150%, but they're tiny fraction of my total portfolio, so hardly returned anything all counted up. I did 170% at one point with Tesla too, but didn't sell at the peak. So ended up with 4.4%p.a. over 5 years.

Save to say I don't stock pick anymore and just buy VTI (kinda like VOO) and some VT.

Lore has it that SP500 doubles your money every 7 years. If someone is 60 and just started, well, it's not going too high.

But for someone who is 20something and begins placing $€200 per month in SP500 (preferably somewhere with the lowest possible fees), and does so every month for all the years he/she works, then there is a very nice surprise waiting for them (and their kids) later in life.

Keep in mind, investment funds don't die like our pensions, they are transferred 'down'. So even if someone has e.g. 200k when they have kids, by the time those kids turn 21, that 200k would have turned to 0-7yo 200k->400k, 7-14yo 400k->800k, 14-21yo 800k->1600k. It needs discipline and consistency though.

Can’t argue with the math but there are still risks (inflation, the government that issues your currency, etc). I’ve seen people sell all investments to buy all the supplies they need to live out their lives, and I used to think it was insane. But it is just a different sort of hedge.

Thanks for the assumed honest post. How are your returns after switching to indexed?

Up 13% since March. (I only recently switched to index funds, so far it's good)

I hope you don't think that type of return is normal. Anything, sustained, over 1% should make use suspicious. Really, that would be 12% per year. That is excellent return over the long run. We are in a mini-bubble, thanks to the Magical Six.

Oh yeah, I'm well aware these are very high returns, and chances are high that we'll soon get a year of -30% or the like, as the average p.a. return over 25 years is usually ~7-10%, depending what timeframe you mesure. (ex fees and tax)

I'm under no illusion that this will continue going forward.

He's talking about 7 years. Lots of people do very very well on short timeframes. They usually balance out in the long run.

I bought into AMD stock when it was $10 per share, it's now $180, yes it's a bit lucky but I'm not bullshitting.

It seemed quite logical to me at the time that they would do well. This was right as Intel was being savaged by Meltdown and the performance hits of the mitigations and Zen 1 was successful.

But will you sell in time for all that growth to not be eroded away? Tech has been doing really well last few years, but it won't last forever looking at history. So when do you sell, and what do you buy when you sell.

This is why people opt for low fee index funds, like a total stock market fund. It'll always be in the right companies.

As noted in my original comment, a large portion of my savings / retirement IS in index funds. My individual stock investments represent such a large percentage of my account only because they've done very well, not because I dumped all my money into them.

I did something similar albeit more recently - I saw Nvidia was doing _extremely_ well, and figured it would pull AMD up as one of the few genuine competitors. I was right.

So I use the Freetrade app for my "fun" investments. I've got about £2k in there, and I've had it for about 4 years now.

There's a section where you can check the "Time-weighted rate of return", basically removing the effects of deposits and withdrawals. Their wiki says this is usually the best figure to compare portfolio performance.

Over that time, my performance has been 337%. The performance of the FTSE All-World Acc has been 67%.

Apparently I'm _massively_ outperforming the world market, which I'm a little suspicous of. I'm mostly invested in tech since I'm a software engineer - I got real lucky with both ARM and AMD, investing days before they skyrocketed, but also got good returns from TSMC (took ages though), Coinbase, and Games Workshop.

GW seems to be mostly flat though the dividends are nice. I wish I’d bought a chunk a decade ago

I only bought about a month ago, and I'm up 10% already, plus a round of dividends. I'm not trying to time the market, I just think GW is a great company with a lucrative future.

It's incredibly believable if you remember there are equally many (very quiet) folks with portfolios down 20/40/60%.

You could have doubled your money on Nvidia since January?? Look at the charts for all the evidence you need. There's survivorship bias in all the claims but it's easily done for the survivors.

Anecdotally, the prior decade had a few years that returned >40% for many people that weren’t indexing, and averaged well above the S&P500 over that period. The market conditions were nearly ideal for making those kinds of bets in the 2010s. We are no longer in that market and ZIRP is a fading memory. Part of being a more active investor is recognizing periods of years when certain strategies are likely to be profitable and robust and when they are not, and adjusting your investments appropriately.

I believe it, but remember we only hear about the success stories. The people like me who bet on losers are not posting their stories.

With enough darts (and monkeys throwing them), you're bound to get some outliers over time.

I 10x with NVDA, but I got lucky. It's like winning the lottery.

Yeah, I've done quite well with a few specific (tech) stocks that were reasonable picks (and some modest bets that were simply wrong). (Which I mostly funneled into a charitable trust that pays an annuity.) But I certainly wouldn't put all my money or even most of it on such a bet. Even if I think I have a better insight than John Q. Public into something, there are so many variables.

Reply on news.ycombinator.com