The Financial Independence Show

Index Funds vs. Stock Picking

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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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                                                The Financial Independence ShowBy Cody Berman and Justin Taylor
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