Stock selection is hard because leaders change hands. 25 years ago Apple was nearly bankrupt – and if it wasn’t for Microsoft’s last-minute investment, it would have gone under. Now it is the largest company in the world (by market cap).
This is one reason that academics (and evidence-focused advisors like me) suggest that owning a broadly-diversified index of stocks in a low-cost vehicle like at ETF makes an enormous amount of sense.
We don’t recommend “buy and hold” for a handful of stocks. We do recommend “buy and hold” when it comes to the index.
This animated graphic from Visual Capitalist starts in 2000 and takes us through present day market leadership. Note that leadership changes hands across geographies as well as companies.
