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If I can't beat the market then why are there all these money magazines recommending single stocks?

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#1

Posted 06-19-2012, 05:00 PM

IvoryCadenza is offline

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If I can't beat the market then why are there all these money magazines recommending single stocks?

I've been reading some financial magazines lately, mostly Money Magazine and Smart Money Magazine. Both of these are filled with suggestions on single stock picks. After reading the Boglehead's guide to investing, I'm convinced that index funds and low cost mutual funds are a much better investment for my future. How is it that these magazines can exist when it is clear that most people cannot beat the market by picking individual stocks?

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#2

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06-19-2012, 05:04 PM

travathian L6: Expert Member sinceMay 2010 Posts1,495 Reputation 386 Followers 0 + Give Rep	Because people still pay them for the subscription fee?
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#3

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06-19-2012, 05:04 PM

mavv is offline

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Quote from IvoryCadenza

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I've been reading some financial magazines lately, mostly Money Magazine and Smart Money Magazine. Both of these are filled with suggestions on single stock picks. After reading the Boglehead's guide to investing, I'm convinced that index funds and low cost mutual funds are a much better investment for my future. How is it that these magazines can exist when it is clear that most people cannot beat the market by picking individual stocks?

Simple because the magazines want to sell... well magazines and they need to have something to write about. Simply recommending index funds would not sell that many issues would it?

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#4

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06-19-2012, 05:28 PM

PiratesSayARRR

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Some people choose to buy single stocks and create a diversified portfolio that way. Based on historical numbers I can tell you that the momentum strategy does indeed beat the market but is impossible to do for the average joe as you need a lot of bank roll and time to do it. I'm actually working on a paper on the use of the momentum strategy as a profitable trading strategy. I'm essentially working on a variation of the strategy that would be much easier for a smaller trader to implement.

Hate is a strong word... but I really really really don't like you

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#5

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06-19-2012, 05:52 PM

financechick is offline

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Quote from IvoryCadenza

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...Money Magazine and Smart Money Magazine...are filled with suggestions on...stock picks...How ...[can] these magazines...exist when ...most people cannot beat the market by picking individual stocks?

some of the readers think the "experts" featured in the magazines are above average & therefore able to beat the market.

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#6

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06-19-2012, 06:03 PM

Brian1 L9: Master Member sinceSep 2005 Posts5,187 Reputation 972 Followers 2 + Give Rep	The same reason there are thriving casinos in Las Vegas: Demand. There are a lot of people who believe they can beat the market. Some do, but it takes treating their portfolio like a full-, or at the very least, part-time job. Use wisely your power of choice. - Og Mandino Comfort is the enemy of achievement. - Farrah Gray
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#7

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06-19-2012, 07:26 PM

barnz008 is offline

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Oh geez, define "beat the market."

Last year, "the market" (say S&P500 for a benchmark) brought back 0% in nominal terms. If you just bought some random stock and sold for a 10% profit (regardless of time), you not only "beat the market" but you outperformed many hedge funds, which, if you think about it, would definitely qualify YOU to be writing articles in lamestream financial press.

The better question is "should I be buying anything in the market in the first place." Answer that with conviction and now you're talking. How come so many people go to the casino not planning to lose yet the casino is happy to take their money when they do?

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#8

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06-19-2012, 11:06 PM

1stBuy is offline

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Quote from IvoryCadenza

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I've been reading some financial magazines lately, mostly Money Magazine and Smart Money Magazine. Both of these are filled with suggestions on single stock picks. After reading the Boglehead's guide to investing, I'm convinced that index funds and low cost mutual funds are a much better investment for my future. How is it that these magazines can exist when it is clear that most people cannot beat the market by picking individual stocks?

The people hyping the stock need to make some money too...what better way than to tell their readers to pick that stock. laugh out loud

laugh out loud

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#9

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06-19-2012, 11:46 PM

kyotuosa is offline

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Quote from barnz008

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Oh geez, define "beat the market."

Last year, "the market" (say S&P500 for a benchmark) brought back 0% in nominal terms. If you just bought some random stock and sold for a 10% profit (regardless of time), you not only "beat the market" but you outperformed many hedge funds, which, if you think about it, would definitely qualify YOU to be writing articles in lamestream financial press.

you got it right, That would be the definition of beating the stock.
But, you made it sound like it's easy to have gain 10% last year. If you bought in May and sold in November then what happened? probably down 30%.

Pretty nice if a fund can continuously beat the stock tho. I would def. put money in that fund.

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#10

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06-20-2012, 04:01 AM

vaultaddict

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You can buy those stocks within a fund.

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#11

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06-20-2012, 04:47 AM

barnz008 is offline

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Pretty nice if a fund can continuously beat the stock tho. I would def. put money in that fund.

Sure, it is "nice." It's also nice to go through the drive through and not have to order everything on the menu just to eat there because you'll get stuck with something you really don't like and it will cost you money.

Also, what happened to market research (both within the stock and macro) and using a stop? You know, real, actual trading? Oh, that's right, with a "fund" you can now "invest" like the "pros" and "beat the market" because it's "proven" over time. All reward, no risk!! Wink

Wink

Sorry for all the "quotes." Big Grin

Big Grin

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#12

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06-20-2012, 07:24 AM

kyotuosa is offline

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Sure, it is "nice." It's also nice to go through the drive through and not have to order everything on the menu just to eat there because you'll get stuck with something you really don't like and it will cost you money.

Also, what happened to market research (both within the stock and macro) and using a stop? You know, real, actual trading? Oh, that's right, with a "fund" you can now "invest" like the "pros" and "beat the market" because it's "proven" over time. All reward, no risk!! Wink

Wink

Sorry for all the "quotes." Big Grin

Big Grin

I feel you have hard time understanding the said premises.
A fund can beat the market continuously then the premises is the fund will beat the market continuously. All your suggestions are outside of the set premises. Same goes to your first post about "beating the market".

It's either you don't really understand what other people are saying or you just like to derail off target in your own imagination.

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#13

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06-20-2012, 08:24 AM

Deusxmachina

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Quote from IvoryCadenza

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How is it that these magazines can exist when it is clear that most people cannot beat the market by picking individual stocks?

Maybe "most people" shouldn't read such magazines. Most people can't do a lot of things, but there's a lot of publications out there about those things.

Joe Biden says Buy a Shotgun! Wackiness ensues! [youtu.be]
Keynesians have "stimulus spent" $16 trillion dollars. Where are the jobs?
Are you on Obama's Little List? [youtube.com]
The biggest tax no one talks about [washingtontimes.com]
"George Ought to Help" [youtube.com]
Keynes vs Hayek economics rap battle [youtube.com]
How the GOP stole the nomination [examiner.com]

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#14

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06-20-2012, 09:18 AM

PiratesSayARRR

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Quote from kyotuosa

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I feel you have hard time understanding the said premises.
A fund can beat the market continuously then the premises is the fund will beat the market continuously. All your suggestions are outside of the set premises. Same goes to your first post about "beating the market".

It's either you don't really understand what other people are saying or you just like to derail off target in your own imagination.

You are alluding to the idea of persistence and frankly no one has done it. While many funds have had good, great and even tremendous runs at some point they lose. Generally, what I have seen happening is institutions and wealthy individuals catch wind of their performance and want a piece of the action. The fund manager obliges because generally these guys have egos larger than the size of their current office space. Managing $50 - $100M is much easier than managing many billions. Their positions get too large to quickly unwind in a given scenario and all goes kaput.

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#15

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06-20-2012, 12:05 PM

barnz008 is offline

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Quote from kyotuosa

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It's either you don't really understand what other people are saying or you just like to derail off target in your own imagination.

You got me, I don't get it at all.

So go ahead, buy only funds with a track record of beating the market. And when the market gets beat, so does the fund...yet the fund still beats the market. Because hey, -5% is better than -15%; which is like making 10%!!! bounce

bounce

You can also put your shoes on backward and run in reverse but all that matters is if you feel you've gone somewhere relative to the pavement. look around

look around

Other than that, one cannot beat the market. One can only take what the market gives them. Try to play it any other way and it will be happy to take your money all day long. That's not to say you cannot make money...I'm simply pointing out the obvious flaws in a dogmatic philosophy.

Last edited by barnz008; 06-20-2012 at 12:11 PM..

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