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1/04/2017 8:12 am  #1

Ignore Stock Advice

It’s Time to Ignore Advice About Which Stocks to Buy in 2017

It’s that time of year when financial advice sites issue their lists of the “Stocks to Buy for 2017.”

Before you take them up on their suggestions, let’s look at how well such portfolios did in 2016.

The portfolios of stocks they were telling you to buy generally did much worse than the stock market over all. The results underline what many personal finance experts recommend: Invest in a broad, low-fee mutual index fund. (The Times’s “Your Money” columnist wrote more on this here.)

In 2016, the broad S.&P. stock index increased 9.5 percent. But if you invested in Forbes’s 2016 list, your money grew about 7 percent. Kiplinger’s was about half that. A list that appeared on the Money magazine site garnered 4.9 percent, and Barron’s returned 5.3 percent.

One such list at CNBC did a little better than most at 10.6 percent. But Vanguard’s Total Stock index fund returned 12.5 percent in the same period.

In 2016, a comparison of the returns of recommended stock portfolios with a broad index fund strongly suggests sticking with the index fund.  

We even calculated these returns by assuming that any of the dividends were reinvested, but still none beat the widely owned index fund.

Last edited by Goose (1/04/2017 8:13 am)

We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 

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