Friends giving stock pick ideas?

[jleo]

Anyone else have people you know giving you stock picking advice? I am wondering when wall street will come in and wipe out all these accounts? I feel like this is the build up get these people addicted to easy gains then yank the rug when they have as many people as possible in the market. My gut is telling me this is going to end bad...

Seems like everyone I know is interested in the market or in the market now curious what everyone else thinks?

[bacchi]

Yes, it does seem familiar to earlier booms.

For example, we now have a modern version of the Nifty Fifty. Remember them? Me neither (before my time and probably yours). (You too can own shares in Polaroid and Schlitz!)

The long bear market of the 1970s which began with the 1973–74 stock market crash and lasted until 1982 caused valuations of the nifty fifty to fall to low levels along with the rest of the market, with most of these stocks under-performing the broader market averages.

The irrationality will likely last longer than you expect, though.

[terran]

There's a saying something to the effect of you know a crash is imminent when your shoe shine boy is giving you stock tips.

[aceyou]

Yes, my friends actually have been doing that more than usual.  But I dont believe there's really any way I can predict a bubble or anything like that...even when things seem weird. 

Actually though,  I just.bet one of best friends 100 dollars on mine 15 that the s and p will  be higher on June 15, 2021 than it was on that day.  My only reason for.taking the bet is that because about 75 percent of the time the market is higher than it was 12 months prior.  My only claim to understanding anything about the market is that it tends to want to go up.

[KungfuRabbit]

There is a massive fundamental difference between "stock pick advice" and "the broader market is in a bubble" - which are you asking about. 

I like talking stocks with friends, and certainly welcome advice.  Almost exactly 1 year ago I was talking to my friend about stocks, we each convinced the other to buy a specific stock.  The one I pitched is up ~400%, the one he pitched is up ~200%, worked out quite well for me (honestly I'm shocked BOTH picks went up so fast, the theory was based on a global macro-trend that needed a few more years to gain steam, but I guess the market saw the same thing and invested ahead of it...).

As far as the broader market is in a bubble, who knows and more frankly who cares?  The broader SP500 P/E is certainly higher than historical averages right now, and who knows how the pandemic will ripple through the economy over the next few years, but generally speaking there is a bad success rate of trying to time the market, just place your money down and walk away for a decade or two. 

My advice?  If you have the stomach for it and want to live risky buy 10-20 stocks of companies that have good fundamentals and can cash in on long term future growth trends, or even better are the ones defining future growth trends.  If you don't have the stomach for it put your money into a super broad market ETF and just ignore it.

You want to know something I was told that really blew my mind on investing?  If you bought 20 stocks and 19 of them went totally bankrupt and the 20th was Apple or Amazon or many others in their early days, you still would have gotten better overall portfolio returns than putting all of your money into a broad market ETF!  I realize there aren't great odds that you buy the next Amazon stock (and if you think you know what it is, I WELCOME YOUR STOCK PICK ADVICE!), but there also aren't great odds that the other 19 stocks you buy go bankrupt either.  Personally I got bored of broad market ETFs, and so far since I switched it worked out much better for me than had I stayed in my broad ETFs, but maybe I just have good advice from friends :)

[terran]

You want to know something I was told that really blew my mind on investing?  If you bought 20 stocks and 19 of them went totally bankrupt and the 20th was Apple or Amazon or many others in their early days, you still would have gotten better overall portfolio returns than putting all of your money into a broad market ETF!  I realize there aren't great odds that you buy the next Amazon stock (and if you think you know what it is, I WELCOME YOUR STOCK PICK ADVICE!), but there also aren't great odds that the other 19 stocks you buy go bankrupt either.  Personally I got bored of broad market ETFs, and so far since I switched it worked out much better for me than had I stayed in my broad ETFs, but maybe I just have good advice from friends :)

I don't know, I think if you bought 20 stocks like Apple or Amazon in the early days there's a very good chance 19 of them are now bankrupt. I'm sure there are 20 stocks that looked like Amazon or Apple at the time and are now bankrupt, so even picking 20 there's no guarantee you picked Apple or Amazon. Also remember that there were times in the middle when Apple and Amazon looked like pretty bad investments. Amazon still looks pretty bad in the part of the business that they started in with most of their profit coming from something totally different (web services). Basically, this is the kind of advice that sounds obvious in hindsight, but I w=still encourage you to buy the index instead of trying to pick the next Apple or Amazon among 20 stocks.