Why does anyone buy individual shares?

Thrugelmir

poppy10 wrote: »

It's generally only old boomers who buy individual shares these days - the sort of people who kid themselves that they have such great insights into the stock market that they can pick out stocks which are undervalued, where massive global financial firms with teams of highly paid PhD level analysts have somehow failed to spot the same.

And the shares that the massive global firms have absolutely no interest in as too small in market capitalisation to warrant paying expensive analyst team to follow.

80% of all share trading globally in 2018 was conducted in just 110 stocks...........

DairyQueen

ZingPowZing wrote: »

Not true.
The expectation should be that, with dividend income reinvested, a pin-sticker can outperform the market.
You realise that the whole financial services industry has a vested interest in stressing how "difficult" investment is?

You sound exactly like my ex circa 1999 but then he remained strangely silent for the following four years.
As you have so little to learn I'm amazed that you deign to hang-out with all of we misguided folk.

Alz1986

I think what the OP has demostrated is a lack of umderstanding.

Firstly, Warren Buffet did not get rich by investing his money into index funds and trackers. And nobody will ever get rich by investing in them either.

My investments in individual shares have far outperformed the celebrated funds SMT or Fundsmith, LT Global etc and all the index trackers. Infact, my biggest mistake was investing into funds which has held me back.

Taking the time to learn how to assess a business, an industry and what moves the markets is not too difficult. Patience in the long term is helpfull.

benbay001

capital0ne wrote: »

Luck, what about your losers or do you only have four shares, and what are the actual amounts.

Your attitude sucks.

Just because you arent capable of doing something, dont assume others arent.

Im 27, have been investing for just over a year, have a book shelf full of value investing books and probably spend 2 hours avg per day learning/ researching.

The overall value of my portfolio is low. I completed an apprenticeship in September, subsequently bought a nice car on loan and am blitzing the loan before making any more ISA contributions.

My Portfolio currently holds
SDY - 28% £447
TIFS - 9% £859
IAG - 4% £644

Finally: SMT - which is currently -1%

As i said, which you so quickly dismissed, if you exclude SMT (which i think is fair, considering its an investment trust, rather than an individual company, i am up 31% over the year.

(£1963-£1497)/14.97= 31.1%

If you include SMT
(£2584-£2118)/21.18= 22%

Please point me in the direction of an index fund that would have made more.

My returns would have been higher if i wasnt playing with such small amounts as fees make up a significant amount of the cost per share.

Apodemus

poppy10 wrote: »

It's generally only old boomers who buy individual shares these days - the sort of people who kid themselves that they have such great insights into the stock market that they can pick out stocks which are undervalued, where massive global financial firms with teams of highly paid PhD level analysts have somehow failed to spot the same.

Generally individual stock pickers do worse than a monkey throwing darts at a FTSE 350 table. But they will fool themselves that they can beat an efficient market. Let them have their fun - their malinvestments benefit the rest of us who are in passive trackers.
https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp

...or the sort of people who started investing before the days of tracker funds, who still recognise the value of an old fashioned portfolio, understand the risks, and happy with their capital broadly matching inflation while getting a reasonable dividend that beats any savings interest rates. Not everyone is hell-bent on beating the markets!

Kendall80

poppy10 wrote: »

It's generally only old boomers who buy individual shares these days - the sort of people who kid themselves that they have such great insights into the stock market that they can pick out stocks which are undervalued, where massive global financial firms with teams of highly paid PhD level analysts have somehow failed to spot the same.

Generally individual stock pickers do worse than a monkey throwing darts at a FTSE 350 table. But they will fool themselves that they can beat an efficient market. Let them have their fun - their malinvestments benefit the rest of us who are in passive trackers.
https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp

The monkeys would probably miss every time especially as they're too busy typing out Shakespearean literature. However, that doesnt invalidate your point, for cash under the mattress may well outperform individual share picks.

Thrugelmir

Apodemus wrote: »

...or the sort of people who started investing before the days of tracker funds,

Tracker funds have been around for some time. Risen in prominence more recently due to the extended bull run. Different investment styles suit different market conditions.

arwain

Linton wrote: »

To successfully manage a portfolio containing a large number of individual funds requires that you spend significant time understanding the financial progress of each of your holdings.


Is it worth the effort?

For a very small number of people it probably is worth it. I read recently on another forum about someone who since 2006 has an IRR of 18%. They have a huge number of investments (200+) so the amount of admin work must be enormous.

arwain

Alz1986 wrote: »

Firstly, Warren Buffet did not get rich by investing his money into index funds and trackers. And nobody will ever get rich by investing in them either.

You will not get rick quickly with tracker funds but I think there are plenty of people who have done well from them over the years especially in the USA.

A regular poster on here bostonerimus has averaged something like a 9% annualised return on his tracker investments over a 30+ year period. Lets say he invested 10% of his salary every month for those 30 years, increasing his investment every time he had a pay rise to maintain the 10% investment figure.

With compound interest working its magic over those 30 years I think we can safely say someone doing the above could be considered rich by most definitions.

If one wanted to become rich in a much shorter time frame then I agree with you, this will not be achieved via tracker funds, Not too many people can do it though, most who try fail.

arwain

newbinvestor wrote: »

Most of my funds are trackers. I would like to invest in individual shares as a sort of fun gamble but the £10 dealing charges make it silly.

Have you considered moving your funds to IWEB, £5 per trade might make it more feasible?