Stock Picking vs Index Fund Investing


If you had invested in the S&P 500 $SPX500 during the crash of 2020, you would have doubled your money today (100% returns). My portfolio returned 285%. I picked 3 out of the 7 best performing stocks in that period, namely, GameStop $GME , Caesars Entertainment $CZR , and Freeport-McMoRan $FCX . How did I pick these stocks? Should you pick stocks or invest in an index?


I invested in these 3 stocks for different reasons. GameStop was a deep value stock trading under its net cash value and was aggressively buying back shares leading to a short squeeze. Caesars Entertainment was an arbitrage deal. Freeport-McMoRan was undervalued as the market failed to see the long-term Copper supply gap. But the underlying principle for all these 3 investments was value investing. How did I find these stocks? I did research. If you are willing and have the time to do research, it is better to do it.


But stock picking can also be more volatile in the short-term and you are certainly going to make mistakes as I did with DouYu $DOYU . I have noticed that I make more mistakes when I'm doing that much research, for example, when I was studying for my CISI exams. There is nothing wrong with investing in an index fund but then, of course, you will have to aim for only average market returns.


Watch the full video on YouTube:

https://www.youtube.com/watch?v=80w3oPHLvEQ&list=UUPO3uUyoXSaFWG-Ldq1mqEQ


Full analysis of GameStop:

https://ishfaaqpeerally.teachable.com/courses/ishfaaq-investment-research-partnership/lectures/11816947


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