{"id":5316,"date":"2012-12-05T11:09:19","date_gmt":"2012-12-05T19:09:19","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=5316"},"modified":"2016-12-21T07:30:49","modified_gmt":"2016-12-21T15:30:49","slug":"still-picking-stocks-ge-a-new-hobby","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/","title":{"rendered":"Picking Stocks? Get a New Hobby"},"content":{"rendered":"

Is picking stocks nothing more than a hobby for bored upper-class men? Felix Salmon, the Reuters blogger, recently wrote an interesting post<\/a> making this argument.<\/p>\n

The piece quickly turns into an exploration of online financial journalism (Salmon\u2019s own job). It also launches into a bit of media criticism about stock tickers scattered through stories.<\/p>\n

There\u2019s a reason for all those tickers, having to do with how news stories get automatically distributed across sites. Salmon should know this perfectly well and seems to have forgotten.<\/p>\n

\"picking<\/a><\/p>\n

The diversion into media, however, means Salmon gives the hobby argument short picking stocks shrift, in our view. Time to dig back in.<\/p>\n

The\u00a0case against picking stocks<\/a>\u00a0can be summed up like this: \u00a0Men do it because they can. They have disposable incomes and time, the two things you really need for any serious hobby.<\/p>\n

He goes on to break down the cost of picking stocks. Salmon\u2019s argument is that picking stocks is\u00a0a cheap hobby, at least compared to typical rich-guy pastimes such as collecting cars, flying planes or riding fancy racing bikes.<\/p>\n

That may be true, but only considering the cost of stock-picking newsletters and services, which Salmon estimates at $5,000 a year. A pittance compared to adventure travel or wine collecting.<\/p>\n

If only the losses from picking stocks\u00a0stopped at $5,000 dropped on worthless stock ideas. The real cost is much, much higher.<\/p>\n

As the market researcher Dalbar noted in its\u00a0most recent breakdown of individual investor behavior<\/a>, active stock investors underperformed the S&P 500 by 4.32% annually over the past two decades. Bond investors trailed by 5.56% annually.<\/p>\n

Just owning the \u00a0S&P 500 over those years brought investors 7.81% a year, on average, while market timers posted 3.49%. The Barclays Aggregate Bond Index gained 6.5% a year while individual bond buyers got stuck with a paltry 0.94% a year in gains.<\/p>\n

If you\u2019re a retirement investor, here\u2019s what happens: Imagine you have $10,000 to start and $10,000 a year to save. Over 20 years at 7.81% you end up with $529,595. The \u201cactive\u201d stock investor has $310,126.<\/p>\n

On the fixed-income side, the passive bond investor has $447,682 while the active bond buyer comes up with $232,335. Compounding being what it is, this trend just gets worse when you take it out to 40 years or more.<\/p>\n

Here come the tickers, Felix: You could get into a passive, long-term plan easily enough with\u00a0Vanguard Total Bond Market ETF (BND) and\u00a0Vanguard Total Stock Market ETF (VTI).<\/p>\n

Add to that a collection of correctly allocated holdings in commodities, such as\u00a0SPDR Gold Shares (GLD), emerging markets with\u00a0Vanguard Emerging Markets Stock ETF (VWO) and real estate through SPDR Dow Jones REIT ETF\u00a0(RWR), among other inexpensive exchange-traded funds. (See how that works? Now this story is all over the web.)<\/p>\n

Nassim N. Taleb, author of\u00a0The Black Swan: The Impact of the Highly Improbable<\/em>, recently took the investment industry to task, arguing in a paper that\u00a0active trading returns amounted to nothing more than luck<\/a>. He called those short-term outperformances the \u201cspurious tail,\u201d the result of chance wins in a field of losers that creates the impression that winning is possible.<\/p>\n

\u201cAn\u00a0operator starting today, no matter his skill level, and ability to predict prices, will be outcompeted by the spurious tail,\u201d Taleb maintains.<\/p>\n

Are you picking stocks or investing?<\/h2>\n

And that\u2019s the important point about picking stocks\u00a0as a hobby. If you are disposed to trade, treat it like a real hobby, with limits. Create a \u201cplay account,\u201d stick $10,000 in it and make sure your real retirement money is properly invested in a serious, long-term plan<\/a>.<\/p>\n

When you blow through that picking stocks\u00a0hobby budget, take your next $10,000 and buy some really nice golf clubs, or maybe take a cruise around Europe. You\u2019ll be more fulfilled.<\/p>\n

There are plenty of generally pointless hobbies in life. Market watching is not that harmful, if you can keep it in perspective as a hobby \u2014 not a lifelong retirement plan.<\/p>\n","protected":false},"excerpt":{"rendered":"

Is picking stocks nothing more than a hobby for bored upper-class men? Felix Salmon, the Reuters blogger, recently wrote an interesting post making this argument. The piece quickly turns into … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":5317,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"yoast_head":"\nPicking Stocks? Get a New Hobby | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Picking Stocks? Get a New Hobby | MarketRiders.com\" \/>\n<meta name=\"twitter:description\" content=\"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2012\/12\/Golf_bunkers_Filton.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@marketriders\" \/>\n<meta name=\"twitter:site\" content=\"@marketriders\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"MarketRiders\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/\",\"url\":\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/\",\"name\":\"Picking Stocks? Get a New Hobby | MarketRiders.com\",\"isPartOf\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\"},\"datePublished\":\"2012-12-05T19:09:19+00:00\",\"dateModified\":\"2016-12-21T15:30:49+00:00\",\"author\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\"},\"description\":\"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.marketriders.com\/investing\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Picking Stocks? Get a New Hobby\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\",\"url\":\"https:\/\/www.marketriders.com\/investing\/\",\"name\":\"MarketRiders.com\",\"description\":\"How To Become A Better Investor\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\",\"name\":\"MarketRiders\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"caption\":\"MarketRiders\"},\"sameAs\":[\"https:\/\/www.marketriders.com\"],\"url\":\"https:\/\/www.marketriders.com\/investing\/author\/support\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Picking Stocks? Get a New Hobby | MarketRiders.com","description":"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/","twitter_card":"summary_large_image","twitter_title":"Picking Stocks? Get a New Hobby | MarketRiders.com","twitter_description":"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.","twitter_image":"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2012\/12\/Golf_bunkers_Filton.jpg","twitter_creator":"@marketriders","twitter_site":"@marketriders","twitter_misc":{"Written by":"MarketRiders","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/","url":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/","name":"Picking Stocks? Get a New Hobby | MarketRiders.com","isPartOf":{"@id":"https:\/\/www.marketriders.com\/investing\/#website"},"datePublished":"2012-12-05T19:09:19+00:00","dateModified":"2016-12-21T15:30:49+00:00","author":{"@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c"},"description":"Is picking stocks nothing a hobby for bored upper-class men? If you are disposed to trade, treat it like a real hobby, with limits.","breadcrumb":{"@id":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.marketriders.com\/investing\/still-picking-stocks-ge-a-new-hobby\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.marketriders.com\/investing\/"},{"@type":"ListItem","position":2,"name":"Picking Stocks? Get a New Hobby"}]},{"@type":"WebSite","@id":"https:\/\/www.marketriders.com\/investing\/#website","url":"https:\/\/www.marketriders.com\/investing\/","name":"MarketRiders.com","description":"How To Become A Better Investor","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c","name":"MarketRiders","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","caption":"MarketRiders"},"sameAs":["https:\/\/www.marketriders.com"],"url":"https:\/\/www.marketriders.com\/investing\/author\/support\/"}]}},"_links":{"self":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/5316"}],"collection":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/comments?post=5316"}],"version-history":[{"count":5,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/5316\/revisions"}],"predecessor-version":[{"id":5359,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/5316\/revisions\/5359"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media\/5317"}],"wp:attachment":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media?parent=5316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/categories?post=5316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/tags?post=5316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}