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cover of episode Team Favorite At the Money: Should You Be A Stock Picker?

Team Favorite At the Money: Should You Be A Stock Picker?

2024/12/18
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Masters in Business
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Larry Swedroe
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Larry Swedroe: 我并不特别支持选股。虽然市场并非完全有效，一些人确实能够跑赢市场，但这非常困难，并且需要付出巨大的时间和精力成本。大多数散户投资者由于交易成本和认知偏差，最终会跑输市场。他们往往会选择一些风险极高的股票，例如破产股票、低价股和小盘成长股，这些股票的长期表现通常不如国库券。即使是像巴菲特这样的成功投资者，其成功也不是完全依赖于选股技巧，而是因为他能够识别出一些具有特定特征的股票，而这些特征可以通过购买相关指数基金来获得类似的收益。 许多共同基金都采用了与巴菲特类似的策略，而巴菲特的伯克希尔公司在近几十年来也并没有跑赢市场。所以，与其花费大量时间和精力去选股，不如直接购买低成本的指数基金，这样可以获得与市场平均水平相似的收益，同时节省时间和精力，提高生活质量。 此外，情绪偏差也是影响投资者选股的重要因素。大多数人高估了自己的能力，而研究表明，那些认为自己能够跑赢市场的人实际上往往会亏损。因此，建议投资者理性看待选股，不要盲目跟风，更不要将大部分资金投入到高风险的选股中。 Barry Ritholtz: (主要为引导性问题，没有提出核心论点，故此处略去)

Deep Dive

Key Insights

What percentage of stocks account for 100% of the risk premium over T-bills?

Only 4% of stocks account for 100% of the risk premium over T-bills, based on nearly 100 years of U.S. stock market data.

Why do retail investors often underperform in stock picking?

Retail investors often underperform due to behavioral biases, such as favoring lottery-like stocks (e.g., penny stocks, small-cap growth stocks, or stocks in bankruptcy) that typically underperform. Institutional investors avoid these, giving them an advantage.

What traits did Warren Buffett identify that contributed to his success, and how can investors replicate them?

Warren Buffett identified traits like buying cheap, profitable, high-quality, and low-volatility stocks. Academics have reverse-engineered these traits, and investors can replicate them by using index funds or mutual funds that follow similar strategies, such as those offered by Dimensional, Bridgeway, or AQI.

What is the downside of owning individual stocks compared to an index?

Owning individual stocks introduces higher volatility and tracking variance, potentially deviating from the index by 5-10%. Owning more stocks reduces this variance, but it’s more efficient to own a low-cost index fund to achieve market returns without the effort and risk.

What is a 'cowboy account,' and is it a good idea for stock pickers?

A 'cowboy account' is a small portion (less than 5%) of a portfolio allocated for high-risk stock picking. It’s unlikely to cause significant harm if diversified and traded minimally, but it’s primarily for entertainment rather than serious investing.

How do emotional biases affect stock pickers?

Emotional biases, such as overconfidence and selective memory, lead stock pickers to believe they can outperform. Studies show that 90% of people think they’re above average, but many who believe they outperformed actually lost money.

What is the key takeaway for investors considering stock picking?

The key takeaway is that most stock pickers will underperform a broad index due to higher risk, volatility, and the low odds of selecting the few outperforming stocks. A small 'cowboy account' for fun is fine, but the majority of investments should be in low-cost index funds for long-term growth.

Chapters
This chapter explores the profitability of stock picking, highlighting the average losses due to trading costs and the naivete of retail investors who often invest in high-risk, low-return stocks. It also introduces the concept of lottery-like stocks and their appeal.
  • Stock pickers on average lose due to trading costs.
  • Retail investors often buy lottery-like stocks (bankruptcy, penny stocks, small-cap growth stocks).
  • These high-risk stocks underperform treasury bills.

Shownotes Transcript

We know it’s challenging, but should you try your hand at stock picking? It's fun, it gives you something to talk about at parties, but is it profitable? Larry Swedroe, Head of Financial and Economic Research at Buckingham Strategic Wealth, which manages or advises on $70 Billion in client assets, speaks with Barry Ritholtz about the challenges of picking stocks. Only a few people have been successful at it over time, and they have become household names. Most of the rest have not earned their costs.

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