Contributed by: Nicholas Boguth
Picking individual stocks is a challenge. Many professionals dedicate their entire lives to the endeavor and still underperform the market. Look at these surprising numbers from the S&P 500 (representing the U.S. Stock Market) and its top 50 constituents.
Last month, the market as a whole was making all-time highs while a lot of individual names were lagging. As of 5/6/2021, the S&P 500 was at an all-time high (0% below its 52-week high), but 45 out of the top 50 stocks were not. If you had investments in some very well-known companies, you may have been 15% or more below the high point!
Investing in individual stocks is not for everyone. It can be a very high risk/high reward strategy; this past year is a great example. Contact your advisor if you’re considering this strategy.
This material is provided for information purposes only and is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation to buy, sell or hold a specific security. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.