Disappointed in Scott Trench

[Mark K.]

Scott, @Scott Trench,

I must say, you truly disappointed me with your negative article on stock investing.

https://www.biggerpockets.com/renewsblog/2015/04/16/ridiculousness-of-stock-picking-waste-of-time-young-investors/?utm_source=newsletter&utm_source=BiggerPockets+Members&utm_campaign=60dee86fdf-EMAIL_CAMPAIGN_2018_04_19&utm_medium=email&utm_term=0_58bb040086-60dee86fdf-77000025

You can start with just $500. Both of my sons did that, as well as friends I helped start investing. All are beating the market.

Your fictional friend Matt has many negatives compared to us small investors. It's harder to invest millions, constantly buying and selling, and such.

I put a small amount into Netflix back in 2005. In 2014, I renovated my old basement. If I had held until today, I could have bought a house.

Stock investing is so much easier than real estate investing. 30-60 minutes a month is all that is needed for stock investing. I bought my first rental SFH in 1/17. I had to put a new roof on the shed immediately, plus paint the entire interior. My first tenant I had to start the eviction process after a few months. Then, in the fall, with great, new tenants, I had to put a new roof on that house.

I how have another SFH and I'm buying a triplex. Stock investing is helping me do this.

Shame on you though. I'm shocked at that article you wrote. Real estate isn't the only way to invest. I've met a lot of investors who are Millionaires from investing in stocks.

Stock investing is way easier than real estate investing for the little guy.

I'm emailing you this and I'm posting it in the forums to call you out on this misconception and factually incorrect blog you wrote.

Of course, I'll wait to see if any BP folks think I'm mistaken.

My annual return from stock investing is over 16% since 2005.

Maybe I can do better in real estate, but we shall see. 

[Scott Trench]

This is a great discussion, and yes that blog post is a few years old. I think my perspective, however, has not changed dramatically.

To clarify, I am NOT against stocks in general, and have a significant portfolio of stocks. In fact, the vast majority of wealthy people I have met in my life have a combination (in some cases ALL) of the following things:

- Real Estate

- Stock Portfolios

- A sizable cash position

- A business

- A successful, high-income career

So, I certainly do not want to knock stock investing, and am and have been throughout my career invested significantly in the market.

What I hoped to argue in that article (and I believe that I was a bit immature with the headline! I'm sorry and am still learning and growing as a writer!) is that individual security analysis is a waste of time for many, if not most, folks, particularly those just starting out. Index fund investing, passive investing, is something that I believe in strongly, and I have a large position in this myself.

I continue to stand by my overall viewpoint in the article - that the vast majority of investors with portfolios less than a few hundred thousand dollars should invest in passive funds, and not attempt to pick market winners. And I support this viewpoint not just from personal experience (which is a terrible frame of reference!), but from my reading and absorbing numerous viewpoints on various stances. For example, I've read Ben Graham and Peter Lynch, who make strong cases for how an investor CAN beat the market through individual security analysis, AND I've read Burton Malkiel and Jim Collins, who make strong cases for why predictable, sustainable outperformance of the markets is *extremely unlikely* (but not impossible) for most, and why index fund investing is a superior alternative.

The case I try to make in this article, and where I still stand, is that it is a waste of time for the majority of folks who are seeking to generate greater than market average returns to attempt to pick individual winners. This is because the amount of research and work needed to do that seem to be prohibitive and a low dollar-per-hour activity, particularly for folks investing portfolios of less than a few hundred thousand dollars. That, and the data presented by Mr. Malkiel and Mr. Collins seems more convincing to me as repeatable for the average person than the results attained by the extraordinary individuals in Graham, Buffet, and Lynch. 

I do have a bias for real estate investing, and think that the effort put into real estate investing CAN give your ordinary individual investor great odds at producing excellent investment results. So, I believe, and act on this belief, that it is wise to passively invest in index funds, and actively invest in real estate.

I am, however, DEFINITELY willing to explore the concept. I have been and will continue to act on the belief that outperforming the index with individual stock and security analysis is a low-probability endeavor and one where I and many others will likely fail. However, I love to continue to challenge that assumption and am always open to new viewpoints! 

I am also sorry for my silly and immature title to that piece!