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Author: PSUEngineerFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81633  
Subject: Re: IRA capital gains convert to ordinary income Date: 4/17/1998 2:24 PM
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Thank you for sharing your story about your dud. I am truely happy for you for your success in attaining a 45% return.

But your financial situation is more the exception than the rule. The average household income is $42,000 per year. I doubt that these people can purchase 20 different stocks like you have. Most probably are limited to 3 to 4 stocks. Therefore the effect is greater on total return if you have one dud.

I am not against stocks or for index funds. Actually I plan to move more of my funds into individual stocks. because I have the interest to do it.

The point of my original post is that many Fools diminish the risks of investing in stock and think it is easy to beat the S&P 500. (I guess I did a lousy job making it.) You can beat an S&P index fund that is in a 401(k) with a taxable account but it takes good research. An S&P index fund can afford some duds but 3 to 4 stock portfolios that many average families have can take a real hit.

By the way, I want to thank Pixy for the equations for determining the return needed in a taxable account to beat the return in a 401(k). An eye opener. (Can be found in this thread)

You can win through hard work, not by reading hot stock tips and throwing darts. The long bull market has convinced people that it is easy.
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