In a series on investing pitfalls, I wrote an article warning readers about overconfidence, where I said
“There is nothing wrong with investing in individual stocks if you are truly knowledgeable and willing to put in the time to follow the companies you own.”I used to believe that smart people willing to put in the work to pore over annual reports and financial statements could beat the stock market averages. Former self, I think you are wrong. I no longer believe that intelligence and hard work are enough. There are too many brilliant people trying to do the same thing. Unless you are a true financial genius or have access to inside information, I’m pessimistic about your likelihood of keeping up with average market returns over the long run.
Sadly, I know too many small investors who think that following stock prices and calculating dividend yields qualifies them as stock experts.
On the Positive Side …
Here are a few of my older articles that I still quite like:
What is a mutual fund? Here I tell a story designed to explain the different players involved in mutual funds and their motivations.
Why does my financial advisor seem to work for free? This is the story of how years after investing in mutual funds I came to understand how my financial advisor was paid.
What is an MER? Aimed at novices, this article explains management expense ratios and why small percentages matter.