forrado wrote:“I sold all the biotech stocks first thing in the morning, and shortly after that I sold my internet stocks too – and that was the start of the crash."
Doing that in 2000 would have put him well ahead of the game, and even allowing for a few bumps along the way, would have set their husband & wife portfolios up nicely for what was to come.
Yes, the first rule of making money is not losing money. Selling out in 2000, presumably just before the dotcom debacle hammered stocks was a good move, in hindsight, just like selling in the summer of 2007 would have been. But he could just have been lucky, especially considering his rather quirky reason for doing so.
More generally, his strategy of holding a small number of high-growth shares paid off but, again, how much of that was luck? If 1,000 investors had started out with that strategy, the odds are good that one of them would do spectacularly well. Another would have lost everything and everyone else would be distributed somewhere between those two extreme. Overall that strategy may not have out-performed, but outcomes would be very scattered and polarised. Imagine a thousand investors betting the farm on a single share 30 years ago - one of them would have picked Apple. The rest?
So is his success really due to him being so much better and smarter than the rest of us? Or so much luckier?
Now maybe I shouldn't talk, since the ISAs my wife and I hold limp slowly towards a million (between us), whereas he got there and stopped contributing in 2000. So he wins hands down, but he also took a lot more risk, both in terms of concentration and in terms of the types of share chosen.
He won the jackpot but that doesn't mean that such an approach can work for most investors. In fact, by definition, it cannot.