I bet that over the course of a year, I can outperform most people's favorites by 20% by using only techniques discussed in the Apprenticed Investor series, such as stop-losses, money management, position-sizing, etc.
The point of this exercise is to demonstrate that stock selection is far less important to performance than a host of other factors. The overemphasis on stock-picking permeates the financial media. It's easy to see why. It has a good story line, an inherent dramatic conflict. It lends itself to the horse-race-type coverage that's so easily done. Plus, it's easy for readers to comprehend: Buy this, don't buy that. You can understand why the media and investors overemphasize it.
But the fact remains that regardless of the importance put on stock selection, most investors have underperformed the market, despite, I may add, recently going through the greatest bull market in history. That should raise serious questions to those whose sole emphasis is stock selection.
Consider how many fantastic stocks people owned in the late 1990s: Cisco (CSCO - Get Report), EMC (EMC), Dell (DELL - Get Report), Yahoo! (YHOO - Get Report), Amazon.com (AMZN - Get Report), Intel (INTC - Get Report), Microsoft (MSFT - Get Report), Qualcomm (QCOM), Juniper (JNPR - Get Report), AOL, Iomega (IOM) -- the list goes on and on.Yet despite these marvelous stock selections, many people, probably most, did not do all that well. I would even hazard to guess that many holders of these terrific stocks ultimately lost money on them. Where's your stock selection, now?