Index Funds vs. Stock Picking

The Financial Independence Show

In this episode, Cody and Justin discuss one of the most heated investing arguments.

Should you hand-select the “best” companies, or invest in the total stock market?

Some topics include:

• Individual stocks are often investors’ first exposure to the stock market
• The mental drag of stress from volatility
• How individual stocks can scratch the itch
• Setting non-negotiable limits
• More certain path to FI vs the potential for a home run
• Bad bets we’ve made on individual stocks

As part of this discussion, we compared several individual stocks against VTSAX.

VTSAX is an index fund Vanguard offers and tracks the total stock market.

List of stocks including present-day value and annualized return if you invested $1,000 on Aug 9, 2004, and reinvested dividends:

• VTSAX
  • $5,807
  • 9.19% average annual return

• Intel
  • $1,623
  • 2.45% average annual return
  • 7th Market Cap

• Abercrombie and Fitch
  • $4,679
  • 8.02% average annual return
  • Couple of years after Hollister’s launch

• Apple
  • $396,562
  • 34.85% average annual return
  • Released iPod Mini
  • If you bought on July 6, 1994 (Forrest Gump release date) -> $1.1M (26%)

• Coca Cola
  • $6,007
  • 9.37% average annual return
  • Released C2

• General Electric
  • $1,243
  • 1.09% average annual return
  • 5th Market Cap

• Wells Fargo
  • $2,627
  • 4.95%
  • 15th largest market cap

• TI
  • $11,496
  • 12.98% average annual return
  • Year TI-89 was released

• Sony
  • $2,691
  • 5.07% average annual return
  • PSP release date

• Nokia
  • $730
  • -1.56% average annual return
  • 9 phone releases

We cover all of this and more.

We hope you found value in the episode, if you did, subscribe, leave a review, and share with a friend!

Links from The Episode

• Stoculator

YouTube Interview

https://youtu.be/0N4IlLBrYV0

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