>Just hold anon!
>Never realize your losses it will surely go up eventually!
>Stockpicking is not a meme
>John Cramer isn't a scammer or anything anon!
You've invested all of your money in a handful of companies. You stand to lose a lot of even one of those companies performs poorly. Wouldn't you prefer to spread out your investments over hundreds, or thousands of companies?
>Wouldn't you prefer to spread out your investments over hundreds, or thousands of companies?
Yes and I do that by purchasing ETFs with real money.
But this was just for fun and to test if it will work or not.
>Doesn't hedge in his portfolio
>All his picks move in the same direction
Dude, if you're not gonna buy index funds, at least buy a good mix of stocks that hedge each other a bit. Like, if you're gonna fuck around with stuff that does well in a bear market, pick a few that do well in a bull to diminish your risk.
Honestly, has no one ever been taught portfolio theory here?
I think he means like beer and fast food stocks doing good in a recession. Those stocks will still give a return in a better market. Not following?
McDonald's did really well in the recession, but chipotle, 5 guys, etc, have been doing really well now that the economy is better. People have more money for better quality.
>McDonald's did really well in the recession, but chipotle, 5 guys, etc, have been doing really well now that the economy is better
Exactly so why would I get both of them?
Wouldn't it more or less equalize my gains? Since when we're in a recession half my stocks would be doing poorly while the others would be doing well and the opposite during a bull period.
It's unlikely that you'd pick two stocks with perfectly negative correlation. You'd also fuck around with weights, so unless you weighted equally and somehow found two stocks that had that perfect negative correlation, you'd be fine.
Key thing is you want to optimize your portfolio, which means maximizing return while minimizing risk. If you know how to use solver in excel, you could put in your stocks and their betas (because the beta of a stock measures correlation between the stock and the market) and optimize to find your weights for the optimal portfolio.
I only know this because I took an investments class and we went over this. I mainly fuck around with commodity etf's cause they interest me, and I think investing in companies is boring.
Cool thanks anon. I'll look into this more.
As I said this is just memay stocks, in real life with real money I just buy one s&p ETF whenever I have enough that trading fee is a very small percent
Except McDonald's has posted massive losses because of Japan's market for foreign food drying up. Fast food might continue to do well in the US, where poor people waste their money, but the foreign market is going to disappear. Can McDonald's, or any fast food chain, survive a foreign demand implosion?
You lower returns (on average) but also lower risk(on average).
You don't net 0 Because that implies the stocks are perfectly inversely proportional and if that were true we'd be millionaires.