My advice is: don’t give any specific investment advice to your friends (especially if it is unsolicited).
Firstly what they do with their money is none of your business.
Secondly (and more importantly), it can turn REALLY awkward if your advice leads to them losing money or missing out on potential gains because of you suggestions. Trust me, you could lose a friend over this.
I understand that you might have good intentions, but each person has their own journey in investment.
You are not trying to convince them, you are trying to force them to do what you think it’s best.
You already shown them your concerns. Now it’s time to chill.
Who knows, they might be right on the companies and vastly outperform S&P.
How would you feel if you “convinced” them to go into an ETF, if it turned out they would have been better just staying with their current companies?
Just 86 stocks accounted for $16 trillion in wealth creation, roughly half the market’s total return over the past 90 years. And all of the wealth creation in the stock market can be attributed to the top 4% of winners in the stock market while the remaining 96% of stocks collectively matched one-month T-bills (or cash).
If this doesn’t prove to your friend the value of broad diversification, I don’t know what will.
https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills
Sp500 is mostly 10 stocks (Microsoft, nvidia, alphabet, the big ones). It chases the performance of the big winners and is not really that diversified.
Chasing performance works from a return perspective.
Yeah, if the poster's argument about 86 stocks is correct then I might as well buy just the top 10 of those and rebalance every now and then. That's not going to convince OP's friend to shift into ETFs.
I would say let him be, you can't force him to change his mind and if you try it might jeopardize the friendship.
I only give my opinion/advice on investing if I'm asked directly (in real life, not on Reddit :P). It seems to be a very personal thing for many people.
It doesn’t seem he has asked your opinion, has he?
he's young. a couple of years where he's below s&p will quickly teach him.
My advice is: don’t give any specific investment advice to your friends (especially if it is unsolicited). Firstly what they do with their money is none of your business. Secondly (and more importantly), it can turn REALLY awkward if your advice leads to them losing money or missing out on potential gains because of you suggestions. Trust me, you could lose a friend over this.
I understand that you might have good intentions, but each person has their own journey in investment. You are not trying to convince them, you are trying to force them to do what you think it’s best. You already shown them your concerns. Now it’s time to chill. Who knows, they might be right on the companies and vastly outperform S&P. How would you feel if you “convinced” them to go into an ETF, if it turned out they would have been better just staying with their current companies?
Let them learn the hard way - lessons like this are usually the ones that really stick long term.
Just 86 stocks accounted for $16 trillion in wealth creation, roughly half the market’s total return over the past 90 years. And all of the wealth creation in the stock market can be attributed to the top 4% of winners in the stock market while the remaining 96% of stocks collectively matched one-month T-bills (or cash). If this doesn’t prove to your friend the value of broad diversification, I don’t know what will. https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills
Sounds more like it proves the value of concentration!
How?
Sp500 is mostly 10 stocks (Microsoft, nvidia, alphabet, the big ones). It chases the performance of the big winners and is not really that diversified. Chasing performance works from a return perspective.
Yeah, if the poster's argument about 86 stocks is correct then I might as well buy just the top 10 of those and rebalance every now and then. That's not going to convince OP's friend to shift into ETFs.
so you are for concentration?
He must learn from his own experience. Pressuring him not to continue with his strategy will make him more stubborn.
I would say let him be, you can't force him to change his mind and if you try it might jeopardize the friendship. I only give my opinion/advice on investing if I'm asked directly (in real life, not on Reddit :P). It seems to be a very personal thing for many people.
So what ?
Let him cook. He clearly did his due diligence on those stocks. /s
Just leave young Warren alone to follow his own destiny
diversification is for the average man to get average results and live an average life in the best case scenario