You’re going to mess up throughout your investing career; there’s no way around it. Famous investor Peter Lynch once said that you’re doing well if you can get six out of 10 stock picks right.
In other words, success means slightly outpacing a coin flip! The reality of investing is that it’s really hard. Sometimes you make a mistake, and sometimes an investment fails for reasons you couldn’t possibly see coming.
So why would anyone invest in individual stocks if the odds are so much against you, and how do you succeed in the market? Roll up your sleeves because you’ll never “unsee” what I’m about to walk through with you.
Your winners matter more than your losers
Six out of 10 stocks — how can you be successful getting nearly as much wrong as you get right? People have a big misconception that the losers and winners have the same impact on their investment returns.
Suppose you buy a stock and the company goes bankrupt. The most you can lose is the money you originally invested, a 100% loss. But a stock can appreciate way beyond 100%, meaning a single winner can make up for multiple losers.
Imagine you buy and hold 10 stocks for a decade. Of those, nine out of 10 stocks go to zero. However, your 10th stock goes up 1,000% over that time. Having 90% of your stock picks go to zero would be disastrous, yet you would still make money by the end of the decade because that one winner overcame all of the losers.
The odds of picking the “big one”
Keeping this in mind, an investor’s goal may be to find these winners, but how common are these exceptional stocks? Vanguard studied all stocks that were part of the Russell 3000 Index from 1987 to 2017. Roughly 47% of all stocks, nearly half, were “losers,” generating negative total returns over their lifetime. In fact, the total return of the median stock was just 7%!
Meanwhile, about 7% of the stocks generated 1,000% or more in total returns. In other words, the index was a wasteland of bad stocks, with a small group of exceptional stocks generating most of the returns for the stock market index.
More swings at the plate create more hits
I’ve seen many investors speak of diversifying their investments as a defensive strategy, with the idea that great investment returns come from concentrating a portfolio around a select few of the investor’s best ideas. But mathematically, the odds of mediocre performance could increase because they’re taking fewer “bites of the apple” to find those genuinely life-changing investments.
No matter how smart you are or how much research you do, investing will always have a little bit of luck involved. Too many things can go wrong — deceitful management, fraud, emerging competition, recessions, etc. Many of these are virtually impossible to predict.
But rather than a defensive tool, a diversified portfolio helps you achieve more upside. It increases the amount of “swings at the plate,” giving you better odds of hitting a home run. Remember, it only takes a few big winners to build a lifetime of wealth.
10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Stock Advisor returns as of 2/14/21
The Motley Fool has a disclosure policy.
If you know of local business openings or closings, please notify us here.
· Pedro’s Cafe in Emmaus to close
· SV Sports (formerly Schuylkill Valley Sports) to close Quakertown location
· Flemington DIY will host a Grand Re-Opening on May 14 at 26 Stangl Road, Flemington. The celebration will kick off at 10 a.m.
· Elpedio’s Ristorante at Seipsville opened at 2912 Old Nazareth Road in Easton. The restaurant is open Wednesday through Sunday.
· Uai Brazil opened at 315 Lehigh Ave, Palmerton, offering both a seated or buffet option.
· Colombian Mex Restaurant opened at 107 E Union Blvd in Bethlehem, offering traditional Colombian cuisine.
· Precision Ink opened at 161 W Berwick St. in Easton.
· King Wing opened a location in Bethlehem at 129 E. Third St., serving wings and sandwiches.
· Molinari’s at 322 E 3rd St. in Bethlehem is re-opening, offering ticketed seating with an Italian menu offering.
· The SHED is open at The HOUSE and BARN at 1449 Chestnut St. in Emmaus, serving drinks and cigars.
· Tony’s Pizza & Restaurant opened a new location at 3417 Sullivan Trail in Easton.
· Big Papa’s Restaurant & Catering opened at 1236 Northampton St, Easton. Dale Koehler & Sons Farm will supply the restaurant with meat and eggs.
· Route 61 Hardware has its ribbon cutting at 635 Fountain St. in Ashland at noon on June 24.
· The Shenandoah Pharmacy will hold a ribbon cutting at noon, June 1, at its 33 N. Main St., Shenandoah, location.
· The Canalside Cup on Route 611 in Williams Township opens for the season May 13
· The Curious Plantaholic Nazareth has expanded into New Jersey with a second store at 20 Main St. in historic Clinton, Hunterdon County. the original store is on Belvidere Street in Nazareth.
· Childcare With A Purpose and Lehigh Valley Martial Arts are both coming to the shopping center on Easton Avenue in Bethlehem later this year.
· Within Harmony wellness center has its grand opening May 18 and 5 p.m. The center, which will provide services such as reiki and crystal energy sessions, is located at at 182 S. First St. in Lehighton
· Time 2 Talk Therapy Services will hold an open house June 1 at 521 Bridge St. in Lehighton
· Alter Ego Salon & Day Spa to hold grand opening on May 22 at 500 Broad Street in Emmaus
· Sephora at Kohl’s to open at Whitehall Kohl’s
· Juliette Bridals by Ivana has relocated to 161 Glenworth Rd., Pottsville and is having a “relocation celebration” on May 19 at noon.
· Iqor has opened a new 30,000 square-foot call center in Allentown
· Life Advance Fitness at 436 State Ave. in Emmaus opens on May 11
· Grocery Outlet Bargain Market is open at 561 S. Broad Street in Lansdale, in the former Super Foodtown location.
· The Caribbean Grill will hold its grand opening on May 10, 5:30-7:30 p.m. at 1800 Sullivan Trail in Forks Township.
· A new mafia-themed bar named Capo & Co. Keg and Cork Kitchen is hiring staff in Emmaus. The restaurant is at 1375 Chestnut St. and will feature a self-tap wine bar.
· Terrain on the Parkway, at 1625 Lehigh Parkway East in Allentown is open and renting apartments ranging from studio to three-bedroom size.
· Sports and Social opened April 28 in Allentown. The sports bar and restaurant at 645 Hamilton St. is part of a national chain.
· McCall Collective Brewing plans a May opening for its second location at 7743 Hamilton Blvd. in the Breinigsville section of Upper Macungie Township. The original brewpub is in Allentown.
· Project Paw cat cafe and thrift shop opened April 30 at 452 Northampton St., Easton. The cats in the cafe will be available for adoption. The business supports The Center for Animal Health & Welfare in Williams Township.
· McDonald’s of Coopersburg is open at 6690 Short Drive, Upper Saucon Township, just off Route 309
· Oley Valley Inn in Oley Township is coming back as The Riedenau House, a farm-to-table restaurant. It will serve a German menu.
· Margaritaville resort, a Jimmy Buffett-inspired resort is coming to Monroe County. Construction in Tobyhanna and Pocono townships may begin next year, with an opening in 2024 at the site of the old Pocono Manor.
· La Dolce Casa, at 16 W. Broad St. on Tamaqua’s main thoroughfare, has added La Dolce Casa Bakery and Italian Market just three doors away at 32 W. Broad St. in the former Bittner’s General Store.
· Rutter’s opens 3rd location in Berks at Route 222 and Long Lane in Maxatawny Township, north of Kutztown.
· Berks Nature opened The Rookery. The Rookery is in Angelica Creek Park, on top of the existing Nature Place structure.
· New Santiago’s Restaurant at 125 S. Third St. in Coopersburg has reopened after about a year off.
· Obsidian Tattoo & Piercing Parlor of Bethlehem has expanded to Emmaus. The 173 Main St. location is open now.
· Ocean State Job Lot, a Rhode Island-based discount store, will open at the former site of the Kmart at Shillington Plaza in Cumru Township.
This post was originally published on *this site*