Index Beats Individual Trading
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A discussion between Sam Parr and Shaan Puri reveals their experiences and perspectives on individual stock trading versus index investing, highlighting the risks and psychological challenges of active trading.
Key Points:
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Personal Trading Experience:
- Shaan acknowledges consistently losing money when getting on "stock kicks"
- Losses often not realized until 3 years later
- Currently trading Google stock based on recent negative sentiment
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Analysis of Trading Losses:
- Most losses came from selling decisions, not buying
- Two main mistake patterns:
- Buying momentum stocks during COVID (like Zoom)
- Following tips from "smart friends"
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Index Fund Superiority:
- 15-year return comparison showed index investing outperformed individual stock picking
- Sam's partner Joe recently switched to indexing after calculating potential returns
- Both hosts acknowledge index investing would have yielded better returns
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Psychological Aspects:
- Sam views individual trading as a "slippery slope"
- Expresses concern about getting addicted to trading
- References r/money subreddit showing college students losing money on options
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Shaan's Current Approach:
- Uses a small "fun budget" for individual trades
- Views trading as a learning experience
- Acknowledges index investing might be the "correct final answer"
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Risk Management:
- Sam refuses to engage in individual trading despite some successful trades
- Believes the psychological risk isn't worth potential returns
- Emphasizes the danger of getting hooked on trading
Sam Parr
Host of MFM and fitness influencer
Sam Parr is a serial entrepreneur and business media pioneer.
In 2016, he founded The Hustle, a business news media company that started in his kitchen with just $12 and grew to eight figures in revenue.
Sam led the charge in making newsletters popular when few believed in their potential.
After four successful years, he sold The Hustle to HubSpot, a publicly traded company. Now operating as HubSpot Media, The Hustle reaches 3 million readers daily, employs a team of nearly 100, and has been the launchpad for dozens of its staff to found their own media companies and newsletters.
Sam remains the host of the popular business podcast, My First Million, and continues to start and sell companies. He also co-founded Hampton, a highly vetted community for entrepreneurs, founders, and CEOs, and teaches people to write better through his platform, Copy That.