Quote (FrenchVanilla @ Apr 9 2022 03:15pm)
Warren Buffett recommends know nothing investors to index, thus giving the returns of the market in general.
That said, investing in individual companies takes a lot of work to do it properly. You need to analyze a company. This means going through all the 10-ks and 10-qs for the past 5-10 years. You then need to decide what the driving factors are, market share ownership, purchasing power, returns on deployed capital, margins, leverage and much more. And that's just the quantitative side of it. You also have things on the qualitative side such as psychological influencers, quality of the owners and the boards, the story of the company, things that could potentially hinder the company etc.
Then after you do all that. now you have to do the same thing for its industry competitors as well, then cross examine them.
Investing in individual companies is not as easy to do as some people make it out to be. So, id stick with indexing overall if you dont want to spend hours upon hours of your day doing it for, essentially, a living with no guaranteed prospects of out performing the index in the first place.
edit: also when you index make sure you invest in a low fee, non market cap weighted index as it would save you up to 2-3% a year
It’s very easy. The average investor does not outperform the market so buying indexfunds is just better in the long run.