Henry Blodget wrote an article on his Slate column on why the world’s greatest stock picker stopped picking stocks, and why you should, too.
Henry is a former securities analyst who was senior Internet analyst for Merrill Lynch during the dot-com bubble. In December 1998, he predicted that Amazon.com’s stock price would hit $400 (which it did a month later, gaining 128%). In 2000, he was voted the No. 1 Internet/eCommerce analyst on Wall Street by Institutional Investor, Greenwich Associates, and thestreet.com.
While there are many who feel that Blodget is related to the loss of billions of dollars of shareholder assets during the Internet bubble of 1999 and 2000.( Forbes ), Henry now sets out to tell the truth about Wall Street ( Fool ) and this article is a good advice to most investors not to get too carried away in trying to beat the market and constantly picking stocks.
Most stock pickers believe that they are among the tiny minority of investors who can beat the market after costs, and, for inspiration and encouragement, they point to legends such as Warren Buffett and Benjamin Graham. What such investors often don’t know is that even Buffett has said that the best strategy for most investors is to buy low-cost index funds and that the great Benjamin Graham eventually changed his mind about the wisdom of traditional stock-picking. Graham, you may remember, is considered one of the greatest stock pickers of all time, the man who, in the 1930s and 1940s wrote two classics on intelligent investing and whose security-analysis techniques are still taught in most serious investment classes. But in 1976, shortly before his death, Graham told the Journal of Finance the following:
I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when [the bible of fundamental stock analysis, Graham and Dodd's Security Analysis] was first published; but the situation has changed. I doubt whether such extensive efforts will generate sufficiently superior selections to justify their cost.
Tags: stocks, stock, stockmarket, investing, warren buffet, henry blodget, benjamin graham