OhNoNotimAgain wrote: Gengulphus wrote:
OhNoNotimAgain wrote:The simple question is whether you think stock-picking is more powerful than compound interest.
No, that would only be the question if picking what you're invested in and compounding were alternatives to each other, such that one had to choose one or the other. Instead, they work together: one's method of picking investments determines the rates of return that get compounded.
Compound interest is one of the key factors in determing the return of the market, the beta if your like. ...
Badly phrased - the return of the market in any particular historical year is just a fact about the world, not affected by compounding - but I assume you mean that it is one of the key factors in determining the return a particular investor gets over a period. And I agree - it is one
of the key factors. Another
is the rates of return achieved by the particular strategies they choose, i.e. their particular choice of stock-picking method.
OhNoNotimAgain wrote:... By and large passive or rules-based funds investing acrross the majority of the market will give you that return less costs.
And investing in passive or rules-based funds that invest across the majority of the market is a stock-picking method! A particularly easy and cheap stock-picking method, but a stock-picking method nevertheless.
My point is that compounding and choosing the right investments to be invested in are two key factors in investing success, and one really wants both
of them - and that's not an impossible pipe-dream: it's perfectly possible to have both of them! That makes your question about whether "stock-picking is more powerful than compound interest
" a particularly pointless way of thinking about investing.
It seems from the rest of your post that what you're actually trying to talk about is whether investing in passive / rules-based funds or picking individual shares for oneself is the better method of choosing the right investments to be invested in. Had you said "The simple question is whether you think picking individual shares yourself is more powerful than investing in passive or rules-based funds investing across the majority of the market
", I would have agreed with you. (Though not with the suggestion that the answer is obvious: it seems pretty obvious to me from the varying historical performances of IUKD and other passive / rules-based funds that there is no answer that applies independently of the choice of such a fund and
the choice of individual stock-picking method.)
But for some bizarre reason, you decided to treat compound interest as the alternative to individual stock-picking, and as a result got the sheer nonsense of "The simple question is whether you think stock-picking is more powerful than compound interest