Stock Data Observations

My opinion from examining the available historical stock data is that:-

• Stock prices are more driven by sentiment than valuations in the short term (which can mean anything up to a 10 year period)

This can be seen by looking at individual stock gainers in a particular year and:

Examining their company fundamentals (CAPE (price-earnings ratio over a business cycle), earnings per share growth, return on equity and debt vs available cash).

Looking at the performance of trendy companies e.g. Lululemon has recently had a good stock track record. Granted they make good gym gear but will they still be trendy in a few years time? Probably not.

• Individual stocks are very volatile over short time periods affected by news events, profit warnings, profits less than analyst expectations etc. Even the biggest gainers over 10, 15 or 25 years have had negative growth years, sometimes significantly so e.g. Nvidia has returned to a stock investor almost 50,000% over 24 years, but had you invested at the start of 2022 you'd have lost 50% of your investment over the course of that year (but made over 200% had you kept your stake through 2023)
• Day trading makes no sense as government taxes and platform fees mean that you would have to be a real outlier to make money that way. Stocks are highly volatile even during the course of a day.
• Definitely do not invest using a margin account. Platform providers are ready to pounce as soon as your investment is in negative territory forcing a sale at the worst time.
• Buying low fee funds and weighting your investment dependent on which stock market is in favour is best for your mental health. Preferably in accounts where tax relief/avoidance is possible. Invest and forget.
• Individual stock picking is high risk so you should only take this approach if you have money that cannot be invested in tax free savings. View it more as a hobby which you can gradually improve at over time rather than a get rich quick scheme. Warren Buffett was a rich young man and it's easier to make money when you have money. Most people will lose money investing in individual stocks.