This is a great article by fellow ACA advisor Anthony Kure. It supports by position that individual stock picking is not a game you will win!
For the individual investor, doing extensive research, making a trade and having it pay off can be intoxicating- and dangerous in my opinion.
Why? Because based on my seven years of experience as a “Wall Street” stock analyst, I believe an individual’s winning trade on a stock could foster a false sense of confidence that will ultimately cost the investor in the long run.
In my current role as an independent and fee-only financial advisor, I believe individuals and families should not attempt to pick stocks but instead are best served by diversifying their investment assets using low cost, tax efficient funds or ETFs- usually index funds or ETFs. I will dig deeper into this topic in a later post but for now, I want to only provide a general sense of who you are up against when you make a trade on an individual stock.In the simplest terms, when you make a “trade” you are essentially making a bet with someone who has spent a lot of time and money to be better informed than you. Remember, in a case like buying an individual stock, someone else is selling that stock and you are basically in disagreement with that party on the value of the stock. Whether you realize it or not, most of the time that “someone else” is an institutional trader that is leveraging both extensive and expensive research and/or complicated mathematical algorithms to set their price to sell.
read the complete article here: Why Individuals Should NOT Pick Stocks – Perspective from a former “Wall Street” Analyst | Kure Net Worth Management.