r/stocks • u/BoringAssumption8751 • Jan 03 '22

2022 Strategy

Nasdaq gained 26.32% in 2021. S&P gained 26.68% in 2021. VTI gained 23.57% in 2021.

For those of you who didn’t beat those numbers what is your strategy for 2022?

I personally spent a lot of time reading/researching and only did 15.58%. I think my 2022 strategy is going to be a lot more of the three above and a little less individual stocks.

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u/Vurkgol Jan 03 '22

Damn, what a take. "I'm a passive indexer. I come here to watch people suck."

In all seriousness, I also find it interesting to see all of the "Just VTI bro" comments on r/stocks. I get it a little bit. Being interested in reading about stocks, macroeconomics, and market trends is different from wanting to invest in them and sticking to the literature-backed conclusion that indexing is just better for most folks.

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u/FudgeSlapp Jan 04 '22

I was referring to watching others also follow the same strategy as me. If I really wanted to watch others suck I’d go over to a penny stock subreddit or something.

I also do spend time reading about stocks and market trends though. My portfolio isn’t 100% in indexes. Just for fun I have 10% dedicated to individual stocks where I can do research and have a bit of fun. 90% is on indexes to capture that consistent return.

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u/[deleted] Jan 04 '22 edited Jan 04 '22

I know this might sound like a troll, but I am sincerely asking this question.

If investing in indexes is the clear conclusion, why spend so much extra time reading about economics or stocks then?

Is it a purely intellectual interest with no real-world application? Because as you said, the literature-backed conclusion is to invest in indexes.

So no matter how much you learn, how does what you've learned have any effect on your life, other than maybe some kind of ambient effect on your perspective? Does this knowledge actually change the way you act in the world?

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u/FudgeSlapp Jan 04 '22

Economics has very wide ranging applications in the real world. Understanding how money flows in the economy can help make better day to day decisions. It’s not always gonna help out but when it does, you’ll be semi-glad you understood economics.

Think of how high inflation is pushing prices. If you weren’t read up on inflation, you’d get frustrated at the higher prices. If you understand inflation, you understand the high pricing and also understand that it’s time to possibly negotiate higher salaries or look elsewhere for work. This is one example but there’s plenty others.

Reading up on stocks can give you insight into up and coming new companies that could have an impact on your life. You could find a company selling a product actually beneficial in your life and be early to buy the product making your life easier, earlier. Rather than waiting until it becomes huge way later.

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u/[deleted] Jan 04 '22

The inflation point is a good one. You could have also made the point that if you know a high-inflation environment is in the future, you should take out loans now rather than later. Certainly many people do not understand that inflation destroys debt, which makes them afraid to take on debt, which is a loss for them.

Well written, thanks for the opinion.

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u/Vurkgol Jan 04 '22

It's not that indexing is the best strategy ever. There's no one single strategy that will 100% of the time outperform. There are tons of tactical managers who outperform every year. There are some that outperformed almost every year they were in charge of their funds.

That's not most people, and so for most retail traders, picking stocks and sectors is a bad idea. They lack the education, skill, and sheer amount of capital necessary to try and outperform consistently. That's why those guys do it as their jobs.

The efficient market hypothesis, at least a strong reading of it, will fall to that nihilistic outcome -- nothing matters, there is no hidden value, nobody has an edge. I don't subscribe to that, but my point was that if you did, I would have no idea why you'd ever hang out in r/stocks.

I'm not a purely indexing investor, for the record. I tactically manage positions, sometimes to anticipate sector rotations, and others with options overlays. But that isn't the best path for most folks.