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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]My wife works at a financial profit and I work at the SEC with a 470K in combined income.  Our 3M home in Langley is already paid off.  We have about 10M in savings because I purchased Apple stock in 2001.  We’re very lucky.  I am 56 and DW is 38.  I am going to retire soon.[/quote]

Love this story! A close friend’s colleague bought Apple stock in the late 90s because her kid liked the Apple symbol! Instead of buying a new iPhone in 2015ish I invested that amount in stock and it’s up over 500%. Other than that I have a pension coming plus $350k in a 401k and $50k in multiple brokerage accounts. I 50 now, no kids, and want enough to be comfortable at retirement but know too many people who, sadly, passed at or before retirement to deprive myself today. [/quote]This is an interesting lesson for newbies and older folks like my self. 63.  I was cautious in my early 30s as I was constructing my investment portfolio, picked some dividend payers and a few growth stocks but mostly diversified mutual funds.  So I really never hit a home run on my stock investments.  And while my stock mutual funds have kept up with the market, no clear out performance.  But most of us  don't have the time or inclination like Charlie Munger to do the research to pick quality firms. But individual stocks  clearly have the ability to out perform, or in some cases, one stock can  make you financially independent.  Like Apple, NVDA, AVGO, XOM if bought years ago, etc.... Amazing stories of wealth building with stocks. [/quote]

The example you quote from PP (Apple) is an example of luck and survivor bias. I still remember the day, September of 2000, I walked into the Starbucks near the World Bank, saw someone on TV yakking about bad news for stocks, went back to the office and bought 150 shares of Apple and 100 shares of Starbucks. With stock splits and DRIP, those purchases have grown to about 9000 Apple and 1000 Starbucks shares, about 20% of my portfolio. Things could have very easily gone South. I just got lucky. Also, what I didn't (and most people don't) keep track of are the many losers I've had over time and the opportunity cost of holding cash hoping to time the market. All things considered, I would likely have been at the same level of net worth if I had diligently invested all my savings in index funds over time instead of picking stocks. [/quote]

You’re making a straw man argument. No one is saying to invest all your money in relatively green, growing companies, like Apple and Starbucks in 2000 were.

Apple in 2013 was established, 5 years after the iPhone debuted in 2008. Ditto Amazon. Ditto Costco. Apple has gone up almost 10x what is was 10 years ago; Amazon has increased by 7x; Costco has increased by 5x. The S&P 500 hasn’t even tripled over the same time. Investing in FAANG or the Magnificent Seven over the S&P is common sense now. These large corporations aren’t going anywhere.

From Charlie Munger:

https://www.yapss.com/amp/collection-charlie-munger-262-charlie-munger-s-view-on-investing-in-just-three-stocks

“If you take the Mungers, I care about the Mungers. The Mungers have three stocks. We have a block of Berkshire, we have a block of Costco, we have a block of Li Lu’s Fund, and the rest is dribs and drabs.

And is three stocks enough? What are the chances that Costco’s going to fail? What are the chances that Berkshire Hathaway’s going to fail? What are the chances that Li Lu’s portfolio in China is going to fail? The chances that any one of those things happening is almost zero, the chances that all three of them are going to fail.

If you’re a know-nothing investor of course you’re going to own the average, but if you’re not a know-nothing investor, if you’re actually capable of figuring out something that will work better, you’re just hurting yourselves looking for 50 when three will suffice. Hell, one will suffice if you do it right. One. If you have one cinch, what else do you need in life. And so the whole idea that the ‘know-something’ investor needs a lot of diversification.”[/quote]

You are making my point. Munger's choices sound great in hindsight. How many Mungers have we not heard about because their 3 picks crashed and burned and they lost their shirt? Most people that pick stocks are not know-nothing investors. A lot of them are reasonably educated and know what they are doing. They just didn't pick the right stocks.

Let's try an exercise.. What stocks today are the equivalent of Amazon, Apple and Costco 10 years ago?[/quote]

Amazon was $2.50 a share 20 years ago. Apple was 37 Cents. Costco was around $36. At a certain point you have to realize that these companies are not going anywhere and are going to continue to grow. Apple is going to be the tip of the spear in tech in 10 years like it always has. If anyone gets in their way they’ll just use a few billion and buy them before they become a threat. Amazon and Costco have moats and aren’t going anywhere.

The kind of financial advice you’re giving is outmoded and was relevant in a time where companies like Apple didn’t exist. Sears Roebuck didn’t have factories and customers in India and China. 20th Century financial advice doesn’t bear as much weight in this new world of behemoth multinational corporations like Apple. [/quote]

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