How do you pick the good stocks?


Last week was kind of a wild week in the market for stock pickers! We saw record breaking swings in some of the biggest technology stocks.

• Facebook lost $241 billion in value, which was the largest market decline for any stock in a single day ever (by a lot).
• Amazon broke the record for the largest one day gain in value ever. They added $191 billion in value.
• Snapchat fell 23% on Thursday and then went straight up 59% on Friday.

Seeing these swings may make it tempting (or terrifying) to try to pick the winners and losers. The problem is, we don’t know ahead of time what those will be. The instant the news is released (and everyone finds out at the same time) the price jumps to match the markets new expectations. Trying to jump in and out ahead of time is essentially gambling. Might as well go bet on horses at the track!

But meanwhile, good ol’ VTI (Vanguard’s Total Stock Market ETF) chugged up 1.8% last week. Not a very noteworthy increase. But still plugging along collecting the value of the entire stock market and returning it back to those who buy and hold.

Being an index fund investor during these times is great. It’s like grabbing a bag of popcorn and watching celebrity boxing match, knowing you’re the bookie and get paid no matter who wins!

So don’t concern yourself with the wild ride of the market. Don’t be a speculator. Be an investor who buys and holds broad market index funds over long periods of time. Keep regularly contributing money and see your net worth grow exponentially as the years go on! 🙂

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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