Tedx wrote:I think most folk on here just buy a global tracker or suchlike these days. When you can buy the world for a couple of tenths of a percent and then forget about it for a decade or 2, then it seems rude not to.
This is perhaps the biggest difference to the equity investment landscape from when I first started investing in the 80's. Back then I would have to phone my broker to trade and it was always individual securities. The cost of trading was significantly higher than today which encouraged a LTBH mind-set.
Low cost Global trackers have made it more and more important to answer the question 'do I have the skill to beat the market?'. Just as in gambling psychology, anyone who has early success will be more likely to believe they have this skill than those who don't. Statistically there will emerge some that have had several consistent successes and they will come to believe themselves to be genius investors. No amount of discussion will convince them otherwise. They will be able to produce reams of clever rationale that 'proves' it was skill.
If I look at my own portfolio (still mostly individual shares) then those shares that have done best are not ones I would have predicted! At the moment Sage is my best performer and that was tucked into the satchel purely to give diversification into a sector thinly represented in the UK. The share that is quickly becoming my worst performer is Reckitt, thanks to the recent US litigation against their food subsidiary. If asked a few years ago which share should I overweight then my answer probably would have been Reckitt! Global brands etc so what's not to like? Just shows however much research we can do on a company it will always be vulnerable to 'unknown, unknowns'. If people have gone big on companies in the past and been successful then fair play to them but they have been lucky to avoid a left-field event that could have caused things to turn out very differently.
BoE