I'm Awful at Stock Picking

I initially thought I could beat the market by buying specific stocks.  I did this for many years, and had some big wins, but I also had big losses.  Recently, I did an evaluation of my stock investments in the last 10 years.   The good news is that I had a gain overall.  The bad news is that I would have had higher gains from  owning an S&P index fund or ETF.   In addition, I would free up the time that I spend evaluating, buying and selling stocks.

Based on this learning, here the actions I'm taking:

• Scale out of owning most individual stocks.   I am avoiding starting new positions.  I will add to some existing positions that are negative, but plan to scale out later when the entire position is positive.   I am holding long term losses in a separate account to remind myself of my previous poor choices.
• Going forward for stocks, invest in total market index funds and etfs, specifically the S&P, total market and growth stock index funds.  This is much easier to manage since stock risk is eliminated.
• For kids' accounts, dollar cost average (DCA) into their investment accounts and hodl.

I expect this to reduce my anxiety when the market declines and help me be agnostic to short term volatility, which seems to be frequent nowadays.

This approach has been helpful so far this year, but there hasn't been a major correction or bear market yet.  That will be the true test on my new investment strategy.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, stock picking, nor stock investment  advice. Please consult a professional advisor.

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