Latest / Money Grows on Trees / #365 - Individual Stocks Vs Index Funds? (Which Wins?)

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#365 - Individual Stocks Vs Index Funds? (Which Wins?) · Money Grows on Trees

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Looking backwards, picking Apple looks obvious. Looking forwards, identifying
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the next one is one of the hardest things in investing. Most
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people assume great stock picking is about research and
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conviction, but the reality is over the last century, nearly 60% of
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individual US stocks actually destroyed wealth for their shareholders. The
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market did incredibly well, not because most companies
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did well, but because a tiny number of extraordinary companies did
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extraordinarily well. And the odds of picking those in advance are
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not what most people think. I'm Lloyd J. Ross, a seven-figure investor and
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entrepreneur, and I've helped thousands of everyday Aussies, Americans, New Zealanders, Canadians, and
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those from the UK get out of debt and build real wealth. And in this video, I'm gonna show
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you the actual data on stock picking versus index funds
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and why even professional fund managers can't consistently win,
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and the framework to decide which approach is actually right for you.
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Now, as you can see, it's Ferrari week again here in studio, and if
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you haven't watched the episode yet of how and why I bought this Ferrari behind me here,
0:57
go back and check out the episodes. I think you'll really enjoy it. I'll go through the ins and outs of
1:00
the whole thing, plus some cool things you'll learn about tax and ownership, and just
1:03
some cool things about the Ferrari brand. So go back, check it out. Hope
1:07
you enjoy it, but that's why. The red dolly car behind me is here. So
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I hope you don't mind, but she's joined us today for this episode on index
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funds or stocks, which one's right for you. So let's jump straight into it
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now. Without doubt, the biggest fortunes in the markets and in the world, period,
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have been through individual ownership of companies. It is the biggest game in
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town. It's what all the big boys at Apple, Microsoft, Nvidia, Amazon, you
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got Bill Gates, you got Steve Jobs and Elon Musk and
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Warren Buffett. Jeff Bezos, these guys are the richest
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guys in the world and they all got there through building and scaling companies,
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which become public, which is what stocks are, is public shares that
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the public can own of these companies. So if you pick one of those
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early enough and held it, you would have absolutely annihilated the
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index without question, far out. It's crazy how
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well you would have done, which is why Bill Gates, he was at the top of the rich list for
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so long because he owned Microsoft. But
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people like Warren Buffett come along, folks like him, he's owned
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Berkshire Hathaway, his company for a long time, but really he's built wealth through
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identifying and buying private businesses and public businesses over
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time. So he is well known for someone who can buy shares in public
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companies consistently well for long periods of time. Like unbelievably,
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he has outperformed the index so much that check out this statistic. If
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Berkshire Hathaway's share price fell 98%, 98% from where
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it is today, he still would have beaten the index since 1965. That's
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how good he is. Crazy. So can you beat the index? Of course, Warren
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Buffett and his super investor friends have done so. Like Lee
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Liu's done it this year, Chris Hunt. There's people that do it, right? It's not easy. You
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have to be smart, but you also have to have the right emotional intelligence and
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work hard at it, but it's totally possible. Lay people do it. They do. It's
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totally possible. Last year, I beat the index. So totally doable, but
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what does it take and what's the best approach? So let's keep going. Here's the
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interesting part. When you look backwards, things look obvious,
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but looking forwards is way harder. I'll give you an example. A
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couple of years ago, Meta fell by, God, it went from
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probably, I want to say $400 or $500 a share down to $100. And
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the reason it did that is because it basically tore up $80 billion of
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cash building this Meta universe that
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never transpired, and it just never got a return out of it. And
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investors punished the stock. They sold out like, oh, this Mark Zuckerberg
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guy doesn't know what he's doing. They lost all hope in the company
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doing anything good. And of course it was selling for a hundred bucks a share and
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I should have bought some, I didn't. It was selling for 10 times earnings, wonderful business. And it
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basically has, I would say seven X'd since then,
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700% return. So there are moments
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where you can identify great businesses that go on sale. Now,
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if you look back at the stock chart, there's a massive fall and
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there's a massive rise. Now you look at, now you go, oh, I would have bought then.
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But here's the thing, I was, I lived through it. I was watching that.
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And I didn't do it. And the reason for it is because when a stock falls,
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it falls because of uncertainty. And uncertainty
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is not a comfortable thing to invest in. And so people
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don't. And so they go, oh, it's not going to work out. And all of a sudden,
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it goes back up. And they go, oh, man, I should have done it. And they didn't, because at the time, it's
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just not obvious. It's not. It's not obvious. Even
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during the GFC when the whole market tanked 50%, people were like, oh
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my God, I wouldn't touch stocks because the whole world's going to disappear and die. I
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saw it in code. People weren't touching things because they don't know how far it's
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going to fall. You don't know how far the knife's
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going to fall, so you don't know when to catch it. That's the real problem. You
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don't know when to ape into it. because you haven't done enough research to
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do so. At the time, I didn't know enough about Meta as a business to have
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an opinion on it, and I didn't have to. You don't have to swing at every pitch, as
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Warren says. It's not always obvious. That's the first thing.
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What I've learned is that if you find companies that have been around a long time, and
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they've been great companies for a long time, great companies tend
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to remain great companies. Not always, but they tend to. Crap
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companies tend to remain crap companies. I think straightaway you
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can get rid of most companies out of your circle of forget about
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them because they're crap. If you just look at some of the good ones, if
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you go and look at Warren Buffett's portfolio, he's got Apple, Google, Coke, American
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Express, Moody's, a couple of oil companies, Chevron. They've been
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great companies for a long time. Look at John D. Rockefeller's oil company, Chevron, ExxonMobil.
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They're John D. Rockefeller's company from the 1800s. They have done well for
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a long time. So you do have these companies and
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businesses that do well over and if you want to buy into them and hold them, you
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tend to do pretty good. But a lot of people don't do that.
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They look for the next big thing. They want to get a bargain. They just can't go
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for the plain vanilla result. Weird. Anyway, let's drop
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a statistic in here. There's research done on 29,754 US stocks between 1926 and 2025. Here's
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what they found. The average return was enormous, but the median stock had
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a lifetime buy and hold return of about negative 6.9%. That's
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a very statistically significant number. So investors in
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nearly 60% of stocks actually experienced a reduction in
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wealth, 60%. Just check this out,
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just 46 companies, 46 accounted
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for half of the entire $91 trillion of net US
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stock market wealth creation over the century. 46 in
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100 years. That's it. That's the episode. How? How
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are you going to do that, right? So the market does incredibly well
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because a tiny number of companies do incredibly well. So
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later I'm going to show you why that statistic completely changes how you think about
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diversification. But first, what are we actually comparing here? Let's
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keep things really basic. We're comparing an individual stock, so
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ownership in one company. So for example, Commonwealth Bank, BHP, Apple,
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Google, NVIDIA, whatever, and your results will obviously depend on how the company goes.
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Versus an index fund, which is where you're buying a basket of stocks. designated to
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track an index, right? And some examples are the S&P 500 index that
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tracks the top 500 companies in North America, ASX 200, which is the top
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200 Australian companies, ASX 300, top 300 Australian companies, MSCI
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World Index, which tracks a broad 1,000 companies in
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the world, the NASDAQ, which is top 100 non-financial companies
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in North America. Each major stock indices has,
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so the Nikkei, which is the Japanese stock exchange, it's
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got an index that tracks the top 50 to 100, Japanese companies
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and same as China and so forth. So indexing is basically
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buying a basket of stocks. You're fully diversified and then your
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returns are matching the market return for that particular market. So
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which one wins? It's basically does an individual company or an individual horse
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win or does the collection of horses in the race win? That's really
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what we're comparing here. That's what we're diving into. And I think what's
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interesting too is that just because you own an Australian index fund that
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may beat a single stock, it may not beat the American index fund. So
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you can even track, you can even compare index funds to index funds.
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So let's have a look at this. Let's do the case for individual stocks. I
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don't want to just cast them aside because there's some real legitimate advantages
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to buying individual stock. And I own individual stocks. Here's
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the major benefit. The first one is your upside isn't limited
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to the market return. Because if you look at the market, It's since 1957, the S&P
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500 has basically produced 10.26% per annum on
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average over that time. So that's the market return. Now here's
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the thing. It's limited to the market return too, if you own the market. Whereas if you own an individual company,
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it's not limited to that. So like for example, had you have bought any number
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of tech companies, you would have just absolutely just, you would have gotten
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so rich. Like monetarily wise, you would have gotten a
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lot of rich, like if there's less limited upside. Okay. So
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if you identify an exceptional business, you can outperform the
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market drastically. Okay, so I think if you look at, I
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think they studied like 29,000 different US listed stocks through
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2023, and NVIDIA actually produced the highest annualized compound return
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of any stock with at least a 20-year history. 33.3% per annum.
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Fucking huge, right? Incredible. What
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about this? Altria produced the highest cumulative lifetime return in
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the study, right? It basically returned $2.65 million for every
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dollar originally invested. For every dollar invested, it
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produced $2.65 million, assuming that
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the investor held it through the entire history, which is not easy to do. I don't know if
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anyone can do that, but that's why they often say, if you're going to buy individual stocks, buy them
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and put them in a drawer and don't look at them for another 50 years. Okay, so
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think about that. That's insane, right? Like 10% compounded every
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year over time is brilliant. That's why indexing is so powerful. 20% is
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extraordinary. Like Warren Buffett produced 19% over
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60 years, which is obscene. Think about 30%. Sustain
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that for decades, 72 divide 30. So 72 divide three
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is, we've got two and a bit. So
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basically your money doubles every two and a bit years. At a 30% return,
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your money doubles every say two and a half years. It's crazy. That's
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with 33% returns, okay? 7.2% at
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10% returns. So you can see, it's really good though. And that's why
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people obsess over finding the next Nvidia, because they know this, right? The
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second great thing about individual stocks is you can own only
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the businesses you like, okay? So you can do that. You can choose quality,
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you can choose on valuation, you can choose on industry and debt and management,
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capital allocation, dividend policy, like all these cool things you can do. So like the
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individual stocks, I own them because I believe they're gonna be around for another 100 years. They've
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got great managers, great capital allocation. They're growing their earnings presently
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and will in the fortuitous future. They're paying good dividends. They grow their dividends for
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many decades and they've proven to do that. And they're not carrying too much debt
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and all these great things. So I get to choose that. I'm not just picking
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an individual company, right? You get to choose the best. Whereas in an
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index, it doesn't matter what you personally think about a company, whether
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it's expensive or you own it. The
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other thing with individual stocks is you can concentrate. So diversification reduces the
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damage, right? If you're wrong, that's great, it's important. But concentration
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can magnify what happens when you're right. So you have
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to definitely know your stuff if you're going to buy an individual company. But that's where
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you're going to do the work. So on the flip side, concentration is
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not always intelligent either. Like I've held, like last year I held a million dollars
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in one company and I ended up diversifying a way out of that, made
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money doing that decision and I'm comfortable now with what I hold. Would
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I have a situation where I could full port my whole portfolio into one stock? Would
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I do that? I think I'd do that with Berkshire Hathaway. I'd probably do it maybe
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with Google. There's a handful maybe, but again, you don't have to.
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I think three. I think Charlie Munger used to say, if you own three really good companies, that's all you
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need. And he owned Bank of America, Wells Fargo, and Berkshire Hathaway. Berkshire
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Hathaway is like a company within companies. It's like its own index fund. But
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Google, if you look at Google and Apple, they are actually multiple
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businesses within a business, which is fascinating. So they're like a mini index fund in
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their own right. They've got five kind of business lines coming
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into them, which make them very diversified too, which makes them
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powerful businesses. So I think if you look at even S&P Global's like
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that, to some extent, MasterCard and Visa have got these consulting businesses
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they're bringing through. So you can find diversification within
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a business, you can. And that's an effective, yeah, if
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you look at Chevron, it's got upstream, midstream, downstream. You'll find diversification
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within a company, whereas if you've got a company that's got one income, it's
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a bigger risk. That's what's interesting. So when it looks concentrated, it
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may not be as concentrated. Okay, so there you go. All right. So
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this is where the data gets brutal. So this should probably be the strongest section
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of this part of this episode that we do. How hard could
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picking winners really be? So we'll talk about the research. They
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did a global study and they examined 64,000 stocks. That's quite a lot of
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stock. 64,000 stocks across the world from 1990 to 2020. That's a
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lot. The results, check it out.
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55.2% of US stocks underperformed one month US treasury bills. risk-free
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asset, treasury bills, 55% underperformed treasury
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bills, 57% of non-US stocks did the same. And
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just the top 2.4% of all companies accounted for
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all the $75 trillion of net global stock wealth creation in
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that time. Just 2%. Like, it's crazy, right? It's
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just a minuscule amount. This is why Warren Buffett just
13:20
is so selective. It doesn't mean that 97.6% of
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stocks lose money. It just means the returns are skewed. So
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you've got lots of mediocre companies, lots of failures, some
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decent winners, and a tiny number of absolute monsters. And
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the monsters pull the average market return upward. This
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is why averages are deceptive. So an example, let's
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go through, let's say there's five companies, company A is 100%, company
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B minus 50% returns, company C 20%, company D
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50%, company E 1,000%. So most weren't spectacular, but
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the one massive winner, that 1,000% returner, can change
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the entire average portfolio. So would you
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rather try and identify the company E beforehand or
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own all five and guarantee that E is actually in the portfolio?
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This is the beauty of indexing, right? And that's the philosophical difference. I
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often can think of it as an individual stock like picking the winner of
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the Melbourne Cup. but a bit more evidence around it, a bit more
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like price discovery and a bit more certainty, a lot more certainty. Or
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an index is like owning all the horses in a race. And
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the odds of you winning are 1.1 to 1. It's so much easier to
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deploy large amounts of capital into
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the 1.1 to 1 odds than it is to put large amounts of capital into
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the, God, I've got to get this right, I've got 2% chance, right?
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I think. So that's why even with my individual stock holdings, I'm
14:45
not just I have typically held between six to eight stocks in
14:48
a portfolio. I have held a lot less. I've had three before. I
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currently have four plus other things. So
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it's fairly concentrated, but it's not really. If it's
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concentrated, you have to be okay with volatility, meaning
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you have to be okay with your portfolio swinging quite drastically because it
15:06
will. Whereas if you own the index, it will swing less drastically. So
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if you're someone who can't stomach big swings, don't buy individual stocks, just
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buy the index. But the other thing with individual stocks, which is, fuck, it's
15:17
so hard. It's so hard. If it starts winning, you've got to hold
15:20
it. Oh my God. You see some big investors like Manish
15:25
and Li Lu. These guys are disciples of Charlie Munger and
15:28
Warren Buffett. And they both held Micron, MU
15:32
Stock Ticket Code, probably two years ago. And it was going okay. They've
15:35
obviously done their due diligence. Some things changed in the business model. I think
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it was a competition thing. So
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it lost a competitive edge with how it was earning money. So they both
15:45
sold it. And then no joke, the next year it 9x'd. Like
15:49
it 9x'd and they didn't hold it. So it made absolute rational sense to
15:52
sell it. And they did, but it fucking 9x'd. And so even with Coke, he's
15:56
had to hold that. You have to have held stocks. Even John
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D. Rockefeller, what I love about him is he held his oil stocks. long
16:04
time and he would just keep buying them. How you do individual, from
16:07
what I have learned, how you do individual stocks is you find companies
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that won't be disrupted, that have been great companies for a long time, that
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will continue to be great companies, and you get a selection of them, diversify
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them away from sectors if you can, so like maybe an oil and railroad, and
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then you have a consumer discretion, and you might have a tech, so like one
16:25
from each of the main sectors. It helps your volatility, and you
16:28
steer clear of cycles, but Outside six
16:32
to eight like that's how you do and you just gotta hold like even
16:35
when Google has gone through that challenge recently with Chachapati
16:39
and Anthropic coming up and they didn't have Gemini sorted their stock
16:42
price was languishing and if you had have held Google all that time you might have thought it's
16:45
the end for Google like we're done and you would have sold and you
16:48
would have missed this massive run up like 2x
16:52
on a two trillion dollar company and you would have lost a hundred percent like It's
16:56
so easy to do because you can get, Peter Lynch have this saying, he used to
16:59
say, the key to stocks is not to get scared out of them. That's
17:03
what's hard about it. It's just not, it's picking in a
17:06
video in 1999 is just not enough. You have to have bought it, not
17:09
sold it after 100% return, not sold it after 500% return,
17:14
survived COVID, the crashes of like the GFC and COVID,
17:18
and tolerate the awful years, still believe in the business and avoid replacing it with
17:21
the next shiny thing. You would have had to have done all that, right? So
17:26
extraordinary lifetime returns often come from relatively unremarkable
17:30
looking annual compounding periods, enormous periods
17:34
of time, right? So when they did this study with all these thousands of
17:37
stocks, 17 stocks with lifetime returns above 5 million
17:41
percent. Check this out. So there were 17 stocks that had returns
17:45
above 5 million percent, which is just flipping ungodly amounts
17:49
of returns. And yes, you would want to be part of that, but check it out. They
17:52
had annualized returns of around 13.4%. So
17:56
you have to get this boring, like over, so years like way up
18:00
and then way down and way up. But the average was 13%, but
18:03
the averages don't look smooth. They're very bumpy. Like Charlie
18:07
Munger had this saying, if you can't handle a few percent of your stocks, you don't need to, you shouldn't
18:10
own them. Same thing, right? So there you go. It
18:14
sometimes, it doesn't always, it's not always smooth. Right.
18:18
So I think that kind of encapsulates stocks.
18:21
And of course we haven't mentioned this, but I will just mention it quickly. What happens
18:24
if you get it wrong? Like you choose Enron and you bought
18:28
these shares in Enron and all of a sudden it's broke. What if you bought Lehman brothers, which
18:31
is like 150 year old investment bank that you would never in a million years think go
18:34
bankrupt. 2008, gone. They let it go bankrupt. You lost
18:37
all your money. That can happen. But it's
18:41
not what usually happens. It's more like
18:46
it might lose 50% and stay there for 13 years. Could
18:50
you imagine? I think this is what's gonna happen to the crypto guys. It's gonna go
18:53
sideways for 10, 15 years, and it's just gonna be brutal. So,
18:58
avoiding catastrophic losses, yes, one thing,
19:02
but holding it, like what about Nike right now? Nike, you would
19:05
have had, now I don't know what's gonna happen to Nike. By all accounts, great company, blah,
19:08
blah, blah. This is why apparel company's not the best, I don't think. It's had
19:11
a 78% drawdown in the last 12 months, 78. You
19:15
had to have copped this on the chin and still hold.
19:18
What if you had 5 million in it? You'd be down to $1.5 million.
19:22
You would have lost $4 million in paper gains. You've got to hold yourself
19:25
through this. And you've got to still hold. And I don't know how low it's going to go. What
19:29
if it sits low for 20 years and then grow?
19:33
See what I'm saying? Like you have to know, anyway. So why are
19:36
index funds hard to beat? Obviously all those things you don't have to contend with, thank God, right?
19:40
So if you're not convinced yet that index funds are the way to go,
19:43
you probably will be by now. So index funds own the great companies and
19:46
the crappy ones, okay? So you will own the whole horses, the sick horses and
19:50
the good horses in the race, but you do get to
19:53
participate in the monster gains of those good ones and the crappy
19:56
ones offset those great gains, okay? The
19:59
S&P 500 for example, use that as an example, it evolves. The
20:03
S&P 500 today is not the same as the one in 1980. So what's cool about it
20:06
is companies have grown, shrinked, merged, disappeared, added value and been removed. So
20:10
I like to say in the horse race, some have jumped the fence, some have died, some
20:13
have just been left behind, but you get to still participate
20:17
and win the race at 1.1 to 1 odds. That's what's cool about it. So
20:20
what's interesting when you hold an index, you're not holding those same companies for the next 20, they
20:24
will evolve and change and it's automatically reshuffled for you based
20:27
on their weights. It's quite an incredible thing. It
20:31
is. You don't have to predict which company is gonna be good 20 years from now. You
20:34
don't have to worry about what happens to a big drawdown sale. It's just such an
20:37
easy path, right? And it's so simple but
20:41
so effective that even the best
20:45
money man has struggled to beat it, right? They do. It's
20:48
up 11.5% this year, despite the tariffs, despite
20:52
the oil, the war. It's still
20:55
up 11%. This thing is like an unstoppable force. I'm
21:00
up 13% on my portfolio currently, year to date, and
21:04
it's been so hard. I've had some big gains in oil stocks, and I'm
21:07
finding it challenging this year. Again, it's not easy. Let me
21:11
give you this statistic as well. In Australia, where I
21:14
live, the 89% of Australian equities
21:18
generally underperform even the ASX 200. It's crazy. By
21:23
and large, U.S. indexes will
21:27
outperform Australian index. Only because if you look at the quality of the companies in
21:31
our countries and how we operate, of course, US is winning
21:34
and winning solves everything. So there's a reason why typically, not always,
21:37
but typically the American index is outperforming Australia. Australia is a very resource
21:42
heavy country. So you're going to have the differences there. So
21:45
in big commodity cycles, we tend to do well, which we're
21:48
about to enter one. So we could do pretty good, but we're predominated by banks and
21:52
they've had a good run up and they probably won't now for a while, so it's
21:55
hard to tell what ASX is going to do. But America, it's just all these unique companies popping
21:59
up all the time, a lot of tech companies. Anyway, I digress. The statistic
22:02
you need to know is this, 90% of
22:06
professional money managers that spend 60 hours a week doing this, they do not outperform
22:09
the S&P 500. Now, Warren Buffett knows this. So he made a famous bet
22:13
in 2007 and he challenged the hedge fund industry
22:16
and he said, I'll bet that you
22:19
can choose five hedge funds and run
22:23
by professional managers and I bet of the next 10 years,
22:27
a low-cost S&P 500 index fund beats them. And
22:31
one of the hedge funds took him up on the bet and they bet a million dollars and they give it to charity. He said,
22:34
okay. So 10 years went by, the S&P 500, check this, it's crazy.
22:38
You're going to die when you hear this statistic. It's 125% return
22:43
for the S&P 500 in 10 years. The other hedge funds, 8.5% average
22:47
annual gain. Crazy, right? Oh, no, that's not
22:50
right. Wait a second. That's the average. It
22:54
is, that's correct. Let's go back. Cut. So
22:57
this is interesting. 125% for the S&P 500, 125%, which is only 8.5% average annual return, by the
23:01
way. It's not heaps. Like, it's good. This
23:07
is amazing what 8.5% a year can do, but do for you. But
23:10
the five portfolios, they did this. One did 21, one did
23:14
42, one did 87, pretty good. One did two, 2.8, one
23:17
did 27. So not one of them beat the index, not even close. So
23:22
even brilliant people can lose a huge portion of return through fees, excessive
23:26
activity and trading, and trying to outsmart everyone, right? This is why
23:30
Warren Buffett has often said in his will
23:33
to his wife Astrid, when I die, put the money into an index fund. So he said
23:37
that time and time again. And he even said, if I was a lay investor and
23:40
I wasn't doing this, I'd just buy the S&P 500 in a heartbeat. It's crazy. But
23:43
index funds aren't perfect either. You have to be careful that it
23:47
doesn't get too concentrated. So right now, the S&P 500 is heavily tech
23:50
concentrated. Now, it's not such a bad thing. It's okay. But just so you know,
23:54
it's predominantly built, made up of tech companies because they've
23:57
done the best. So it's weighted index and they've
24:01
done well. So if there's a big tech drawdown, the S&P 500 is going
24:04
to get hit with that. So if there's a big fallout in the AI boom, you're going
24:07
to see the S&P 500 do pretty badly. If it's done pretty well, don't
24:11
forget. 8.5% from 2008 to where it was. It's
24:14
done like 14% in the last 10 years, year in, year out, which is
24:17
crazy. So there has to be some reversion to the mean. So I anticipate
24:21
the S&P 500 is going to have a couple of down years or a couple of sideways.
24:24
It's not going to always be 14%. Okay, not again. And
24:28
again, I don't know that, but it would, I would anticipate from history that
24:31
it's going to have some correction. Okay. But with AI and computers
24:34
who flipping knows. So getting into the final
24:38
part of this is owning an ETF doesn't automatically mean you diversified
24:41
because it can be concentrated. And you
24:45
have to make sure you've got the right index. You have to understand country-specific indexes.
24:49
You have to understand what's in them. So if you were to own an index, obviously
24:53
you're going to own perhaps one or two or three, and you want to have some level of
24:56
country-specific diversification in that sense. But
25:00
you have to also know that America is like, the
25:04
size and scale of that market is so big and its ability to win in capitalism
25:09
is so vast that it is the place to own stocks.
25:14
It just has the best companies, right? But again, it's based on your
25:17
objectives. The good thing about indexes is they're simple, they're diversified, low
25:20
fees, low research, low company-specific risk, and high probability
25:24
of capturing market returns. That's beautiful. Great, right? Individual
25:30
stocks would suit someone who loves analyzing businesses. They understand financial statements.
25:33
They understand valuation. They can tolerate big drawdowns. They've got a long time
25:36
horizon. They can accept being wrong. They can make mistakes. It's a
25:40
game. So, it's not whether individual
25:43
stocks beat index funds, it's which game you prefer to play.
25:47
That's really what it comes down to, right? Because I own individual stocks, I like playing the game,
25:50
but again, I understand the power of indexing. And so, most people
25:54
can beat professionals by indexing, which is such a beautiful thing. It's
25:57
great. It's awesome, right? So, hopefully that makes sense. You can have a hybrid approach too.
26:00
You can have a core Index, a core index
26:04
and a satellite series of companies and stocks you choose. You could do
26:07
that. That would be sensible. Usually the answer to these questions
26:10
lies somewhere in the middle. And I think that's pretty sensible. And that's not
26:14
such a bad way to play it. Because I don't want you missing out on the Nvidia games. At
26:17
the same time, I wouldn't want you to lose all your money to it. But I think something in
26:20
the middle makes a lot of sense. And I hope that gives
26:23
you some value. But coming back to the original stats and what you
26:27
should be probably focused on is remember, 60% of individual
26:30
stocks reduce wealth over time and just 46 companies
26:33
created it. So I hope that helps you
26:37
make this decision easier, helps make the decision easier what to do. And
26:40
I like the notion of people who aren't going to do the work. It's
26:44
all about going where you're not going to die. And that happens to be index funds.
26:48
And if you look at some of the funds out there, what they can do is quite
26:51
incredible. You and I have access to those. So if you're wanting
26:54
to learn more about the details of shares, ins and outs
26:58
of picking companies and indexes as well, I did a full masterclass
27:01
breakdown on this show on our YouTube channel. I love it.
27:04
It's a full hour. You're going to love it. Go back and check it out. It's called Share Masterclass,
27:08
not meant for the public. Go check it out. It's one of my favorite pieces of content we've ever
27:11
made. I'm sure you'll agree. and share it with a friend if you want to, if they want to
27:15
learn. But of course, if you want to just get your money sorted, go check out our book, Money
27:18
Buys Happiness. I think we've sold over 50,000 copies now, a very popular
27:21
book. Moneybuyshappinessbook.com is where you can get it. And that's for someone
27:25
who really just wants to turn their finances around. And if that's you, it's a perfect starting
27:28
point for you. It's $9, you get some bonuses. And I'll leave
27:31
it at that. So I hope you've enjoyed Ferrari week. It's been a lot of fun.
27:35
And if you go check out that episode, that's fun too. But thanks for
27:38
your attention. Thanks for participating. Hit the subscribe button, share this with
27:41
a friend, and I'll see you in the comments. And I'll see you in the next episode of the Money Grows on Trees podcast.