So, let’s look at my gains (or losses) for the past two years tax calculations resulting from the individual stocks that I sold vs. the performance of the S&P 500 index:
Year 2008 — $300 loss, S&P500 return = 40% loss
Year 2009 — $592 loss, S&P500 return = 26% gain
So, in 2008, I did all right as compared to the market, but in 2009, the proceeds from the stocks sold in my accounts generated far inferior results.
Just a little background on why I have stock holdings at all:
I have stock holdings remaining still my my first couple years of investing where I dabbled around with different techniques, penny stocks, investing newsletter, etc. Now that I have seen the light and the error in my ways, I no longer actively buy individual stocks, unless it is such a small amount that it is truly just to “play around with.”
What’s the morale of the story here?
For me, it just indicates further the following things:
1) Stick to long-term investing in index mutual funds, preferably in tax-sheltered accounts.
2) I do not trust myself enough with my own money to invest in individual stocks, especially over the long term.
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