Just reading about SGH (Slater & Gordon) which is down 90% since June. When you see that and also what's happening with BHP and WOW it's a sharp reminder to me of why I don't try to pick individual stocks.
overall I agree, but just for a moment to take the other perspective ....
- SGH I'm pretty certain I would have no exposure if I was only a direct investor. However thanks to my VAS and IOZ, I have a taken very small piece of that 90% fall.
- BHP, the company itself has been publicly warning the good times are over for at least a few years. I reckon one of the key strategies of nearly all active managers to beat the ASX index in recent years is to be underweight BHP and other resource sector. Perhaps there might be a good chance you take more of a hit as an index investor.
- WOW, perhaps a bit more tricky case, due to the company's strong track record and reputation. Again the warning signs have been there for a while, so plenty of opportunity to get out it early if spotted and ( an even bigger IF ) you had the discipline. But I think many more would fall for this value trap and buy more as it falls.
Now having said all that, I'm far from perfect... I was questioning my WOW and had posted some months earlier asking for views. Decided then to hang on and watch it fall further, before finally pulled the tigger on my WOW holding recently. BHP I'm also guilty of buying a cheeky (unplanned) parcel because it looked cheap and the enticing yield....... So yes as I said in the beginning, overall I do agree the index is probably a safer way :)