Latest / The Dutch Investors / #13 | Why ‘Top 10 stocks for 2025’ lists are a total scam

Transcript

#13 | Why ‘Top 10 stocks for 2025’ lists are a total scam · The Dutch Investors

• 0:00
  Speaker 1: It's a new year, 2025, a time when people reflect on the past year, set goals for the year ahead, and a time for lists Not just Christmas lists, but lots of ridiculous lists.
• 0:13
  Speaker 1: Lists like top 5 stocks to buy in 2025, or top stocks that will double next year.
• 0:21
  Speaker 1: Believe it or not, I've actually seen this 10 stocks that will 10x in 2025.
• 0:29
  Speaker 1: In this episode, I want to talk about one of the biggest traps in investing Clickbait headlines, hype driven stock picks, following the crowd and the constant noise that misleads investors like you and me every single year Sounds familiar.
• 0:48
  Speaker 1: Well, let me tell you something upfront these headlines, while tempting, are worthless most of the time, and in this episode, I am going to explain why.
• 0:59
  Speaker 1: So grab a coffee, sit back and let's break it all down.
• 1:03
  Speaker 1: A quick Google search will show you that even the largest finance companies engage in this practice.
• 1:18
  Speaker 1: Plenty of Substack writers, x-accounts, youtubers and reddit users do it too, and while it's complete nonsense yes, let's just call it what it is we do understand why they're doing it.
• 1:36
  Speaker 1: Let's start with a fundamental question why do these clickbait stock articles and videos exist?
• 1:40
  Speaker 1: Well, the simple answer because they work.
• 1:44
  Speaker 1: People crave certainty, they want a clear and definitive answer.
• 1:49
  Speaker 1: They want someone to tell them things are going to be all right and these are the three stocks that will make you rich next year.
• 1:58
  Speaker 1: It sounds great, right, but the harsh reality is nobody knows what's going to happen in the market next year, let alone in the next 5 or 10 years.
• 2:09
  Speaker 1: Not me, not wallstreet analysts, not even the so called finfluencers with millions of followers.
• 2:16
  Speaker 1: Most people are fooled easily and are too short term focused.
• 2:21
  Speaker 1: Who wants to make money over 30 years?
• 2:23
  Speaker 1: Most people want it today or next year.
• 2:27
  Speaker 1: And yet these articles and videos keep appearing year after year like clockwork.
• 2:31
  Speaker 1: Why?
• 2:32
  Speaker 1: Because they drive massive engagement.
• 2:36
  Speaker 1: These articles drive clicks, likes, views and, ultimately, money for the creators.
• 2:43
  Speaker 1: Not because they actually help you become a better investor.
• 2:47
  Speaker 1: And let's call it what it is it's marketing, it's not investing.
• 2:50
  Speaker 1: And here's the kicker Even major financial media companies do it Because they're not in the business of making you a smarter investor.
• 2:59
  Speaker 1: They're in the business of keeping you engaged.
• 3:01
  Speaker 1: The longer they hold your attention, the more ad revenue they make.
• 3:05
  Speaker 1: It's the classic follow the crowd mentality Everybody wants to get rich overnight or as fast as humanly possible, and sure for a few lucky, and sure for a very lucky few it's possible, but for the other 99%, not a chance.
• 3:22
  Speaker 1: That doesn't mean getting rich through investing is impossible.
• 3:26
  Speaker 1: It just means that real wealth takes time, patience and persistence, and let's be honest, having a combination in today's world is incredibly difficult.
• 3:37
  Speaker 1: Clickbait investing doesn't teach you patience.
• 3:40
  Speaker 1: It feeds you the opposite Impulse emotion and short-term thinking.
• 3:45
  Speaker 1: And you know what?
• 3:47
  Speaker 1: I don't even blame the people making these clickbait articles.
• 3:51
  Speaker 1: It makes money, it captures attention, and time is money.
• 3:56
  Speaker 1: I get it.
• 3:57
  Speaker 1: I really do, because, at the end of the day, these articles aren't there to make you a better investor.
• 4:02
  Speaker 1: They're just here to briefly entertain you and nothing more.
• 4:05
  Speaker 1: It's noise and, to be honest, we have enough noise in our lives.
• 4:10
  Speaker 1: So if you're reading our Substack articles or listening to this podcast, I hope you either already avoid these types of stock picking clickbait articles or you'll start doing so after this episode.
• 4:23
  Speaker 1: From a financial or view account perspective, what we are trying to do with the Dutch investors isn't exactly the most strategic or profitable approach, but, to be honest, we don't really care.
• 4:35
  Speaker 1: We don't count the people we reach.
• 4:38
  Speaker 1: We try to reach the people who count Because these clickbaity creators they make money off people's lack of knowledge and goodwill, and that is something we dislike a lot.
• 4:49
  Speaker 1: We're not here to tell you what you should or shouldn't do.
• 4:52
  Speaker 1: We simply want to caution you against putting too much faith in these kinds of often short-term clickbaity articles.
• 4:59
  Speaker 1: So we're not hating on them, we get it, we really do.
• 5:02
  Speaker 1: It's just not something we stand by.
• 5:05
  Speaker 1: So what's the danger of following the crowd and these clickbaity articles?
• 5:09
  Speaker 1: There's a psychological reason why we're drawn to these types of predictions.
• 5:13
  Speaker 1: Our brains are wired for herd mentality.
• 5:20
  Speaker 1: In investing, this means we see other people piling into a stock we feel compelled to follow.
• 5:24
  Speaker 1: We see Nvidia up 200% and jump in because we don't want to miss the other 200%.
• 5:31
  Speaker 1: We see someone doing exceptionally well with Tesla and all of a sudden think we will also have that success.
• 5:39
  Speaker 1: But that's not how things work.
• 5:40
  Speaker 1: History has shown us that following the crowd usually leads to average or below average returns.
• 5:48
  Speaker 1: As Warren Buffett famously said, and I quote In the short term, the stock market is a voting machine.
• 5:55
  Speaker 1: In the long term, it's a weighing machine.
• 5:58
  Speaker 1: I mean this basically means that in the short term, stock prices are driven by popularity and hype, but in the long term, only the fundamentals matter and your chances of getting a positive return increase with a longer holding period, and that's factual and proven.
• 6:17
  Speaker 1: A great example is the tech stock boom in 2021.
• 6:21
  Speaker 1: Everyone was piling into the same high-flying names, convinced they were the future, and by 2022, many of these companies had crashed by 50% or more.
• 6:33
  Speaker 1: Not all of them, but many.
• 6:36
  Speaker 1: Fear makes people follow the crowd, but exuberant times do as well.
• 6:40
  Speaker 1: Investors well, most of them have a herd mentality.
• 6:45
  Speaker 1: They want to invest only if other people are also investing in it.
• 6:50
  Speaker 1: But short-term hype doesn't equal value.
• 6:54
  Speaker 1: So let's talk about crowd psychology in investing, because understanding this can save you from making costly mistakes.
• 7:02
  Speaker 1: Here's the thing the stock market isn't just numbers and charts.
• 7:07
  Speaker 1: It's made up of people, and people are emotional.
• 7:12
  Speaker 1: Optimism and pessimism, hope and fear.
• 7:17
  Speaker 1: These emotions don't just exist in different investors.
• 7:22
  Speaker 1: They can exist in the same person at different times.
• 7:26
  Speaker 1: History is full of examples of market manias and perhaps no book captured this better than Charles McKay's extraordinary popular delusions and the madness of crowds.
• 7:38
  Speaker 1: He documented some of the most extreme cases, like tulip mania in the 1600s, a time when people paid absurd amounts for tulip bulbs, sometimes as much as a house, convinced prices would never fall.
• 7:52
  Speaker 1: And of course they did, and it's easy to see looking back, and when they crashed, they took fortunes down with them.
• 8:02
  Speaker 1: The pattern repeats over and over again.
• 8:05
  Speaker 1: People make the same mistakes again and again, and it starts with excitement.
• 8:10
  Speaker 1: Prices rise and everyone believes.
• 8:12
  Speaker 1: This time it's different.
• 8:14
  Speaker 1: More and more people jump in, afraid of missing out.
• 8:17
  Speaker 1: The FOMO effect, banks and lenders start fueling the frenzy, making it even easier for people to overextend themselves, and so it eventually cracks.
• 8:27
  Speaker 1: Investors start second guessing, doubts turn into fear, and that fear quickly turns into panic selling.
• 8:35
  Speaker 1: The market collapses, often falling way lower than where it started, sometimes taking years to recover.
• 8:42
  Speaker 1: Those who cannot remember the past are condemned to repeat it.
• 8:47
  Speaker 1: It's just one of my favorite quotes, and what's fascinating is that studies on human behavior show something surprising.
• 8:55
  Speaker 1: The fear of missing out on profits is often stronger than the fear of losing money.
• 9:01
  Speaker 1: That's why we see bubbles form again and again.
• 9:05
  Speaker 1: It's hard to watch friends, family or even strangers making money and not feel like you're falling behind, because in investing, when you follow the herd, you usually get trampled.
• 9:18
  Speaker 1: Year after year, analysts try to predict which stocks will perform the best, and time and time again, they fail.
• 9:26
  Speaker 1: A study showed that most stock market predictions are horribly off the mark.
• 9:32
  Speaker 1: Analysts tend to be overly optimistic when stocks are rising and overly pessimistic when stocks are falling.
• 9:38
  Speaker 1: Why?
• 9:39
  Speaker 1: Because stock prices are influenced by so many unpredictable factors Interest rates, earnings, surprises, geopolitical events, technological breakthroughs and, like I mentioned before, emotions.
• 9:53
  Speaker 1: Also, popular stocks tend to have higher valuations, often widely covered by influencers and analysts.
• 10:01
  Speaker 1: They tend to have a higher valuation, which means higher expectations, which increases the chances of these stocks underperforming.
• 10:11
  Speaker 1: Predicting next year's top stocks is like predicting next year's weather on a specific day.
• 10:16
  Speaker 1: Sure, you can make an educated guess, but the chances of being consistently right Extremely low.
• 10:22
  Speaker 1: And I know there are people listening that, yeah, but I've heard some people being right.
• 10:28
  Speaker 1: Yeah, well, even a broken clock is right twice a day.
• 10:32
  Speaker 1: And yet every december, we see the same recycled content the top 10 stocks that will outperform in 2025.
• 10:41
  Speaker 1: Top stocks to own in 2025.
• 10:44
  Speaker 1: Top stocks to buy right now.
• 10:46
  Speaker 1: And if this strategy really worked, why are we not all billionaires by now?
• 10:52
  Speaker 1: So if stock predictions are mostly useless, what should you do instead?
• 10:59
  Speaker 1: Here's an approach we like to follow.
• 11:01
  Speaker 1: We tend to ignore short-term stock picks.
• 11:04
  Speaker 1: Instead of looking for the best stocks for the next year, we look for the best businesses for the next decade or even longer.
• 11:11
  Speaker 1: We tend to follow the fundamentals, not the hype.
• 11:15
  Speaker 1: Stock prices fluctuate daily, but strong businesses create value over time.
• 11:20
  Speaker 1: We focus on revenue, growth, profitability, competitive advantages and leadership.
• 11:25
  Speaker 1: We read the right sources Instead of following clickbait articles and YouTube videos.
• 11:31
  Speaker 1: Read quality investing newsletters and research from people who actually invest for the long term.
• 11:37
  Speaker 1: A few awesome names that come to mind are acquired business breakdowns in practice or the memo by Howard Marks.
• 11:44
  Speaker 1: But also read the 10 case of the companies.
• 11:47
  Speaker 1: These are the most factual information you can get on a company.
• 11:52
  Speaker 1: They don't follow the crowd, are independent thinkers and they all stay focused on what it's all about the fundamentals of a business.
• 12:00
  Speaker 1: And, last but not least, be patient.
• 12:03
  Speaker 1: Investing is a marathon, not a sprint.
• 12:06
  Speaker 1: The best returns come from holding great companies for many years, not jumping in and out.
• 12:13
  Speaker 1: Based on next year's prediction, as we head into 2025, we challenge you to take a step back.
• 12:20
  Speaker 1: Just do nothing.
• 12:23
  Speaker 1: It's that simple.
• 12:25
  Speaker 1: Sometimes, when you see a flashy headline, don't click on it.
• 12:29
  Speaker 1: When you see a flashy headline, don't click on it.
• 12:31
  Speaker 1: Avoid it.
• 12:31
  Speaker 1: Or ask yourself is this based on real research or is it just engagement-driven content?
• 12:37
  Speaker 1: Is this going to benefit me?
• 12:40
  Speaker 1: Is this helping me become a better investor or just keeping me entertained?
• 12:43
  Speaker 1: Just a few questions to ask yourself.
• 12:47
  Speaker 1: Real investing is about discipline, patience and rational thinking.
• 12:51
  Speaker 1: It's not about chasing the hottest stock picks, earning a lot of money in the short term.
• 12:55
  Speaker 1: You might be right sometimes, but the chances of losing money is way higher.
• 13:02
  Speaker 1: So, instead of following the noise or the crowd, focus on building a strategy that works for you in the long run.
• 13:08
  Speaker 1: That's how real wealth is created, and, if history teaches us anything, following the crowd usually leads to the regret.
• 13:19
  Speaker 1: If you want to go beyond the noise and truly expand your investing knowledge, we invite you to try the Dutch Investors Premium.
• 13:23
  Speaker 1: Instead of handing you a clickbait top three stocks list, our team of four dives deep into one company per person each month, and this allows us to release a new deep dive every single week, analyzing 52 stocks per year with a research first approach.
• 13:42
  Speaker 1: Join a community of like-minded investors who focus on real, long-term value creation and share a passion of everyday learning and investing.
• 13:51
  Speaker 1: We hope to welcome you soon, and that's all for today's episode.
• 13:55
  Speaker 1: Until next time, stay curious, keep learning and happy investing.