Did you get lucky picking individual stocks last year? My cat may have done better!

The other day, I was talking to a teacher friend who said that she had had some very good luck picking individual stocks last year. I cringed a little when I heard this statement. While I am happy for her, it is important to know that last year 96% of all US stocks went up in value. From the end of last March, the stock market gained 75%! This was the highest gain since 1950 and may never happen again in our lifetime. If you were successful picking individual stocks last year, please don’t mistake yourself as some kind of stock picking genius—my cat could have done as well! This year 50% of stocks are already down in value by 10%, yet the S&P500 is up 13%. What this demonstrates, is that on average, you will almost always be better off buying the entire US Stock Market. In the PERA401(k), that would be the US Large Cap Fund and in the 457(b), that would be Vanguard’s Total US Stock Market. Most years, picking individual stocks is a very difficult proposition—Warren Buffett doesn’t even recommend it! Many people may be overconfident of their stock picking skills after last year. Many of those people may have to learn the hard way that picking stocks, over the long run, is a very, very difficult task. If it satisfies your gambling needs, I would recommend doing it with a small percentage of your total portfolio. JL Collins', The Simple Path to Wealth, explains these concepts in greater detail. Consider picking up a copy of his book.

This article explains the numbers in more detail:
https://awealthofcommonsense.com/.../how-to-lose-money.../