Should you buy GameStop stocks? In this week's Arista Advice, we discuss the market frenzy and ways to approach it.
Hello, welcome to Arista Advice. Question of the week is: "Paul, should we buy GameStop?" The answer is no, no, no!
It's interesting that company went from a $3 to $4 billion dollar capitalization to over $26 billion dollar capitalization, more valuable than Delta or Southwest Airlines. And now what's happened? After things have settled down, it's back to its $3 billion dollar valuation.
It's very important to stay invested long-term in a short-term world. Let me share this slide with you from some research that Black Rock, the largest asset manager in the world, with some information that they have. This is really neat.
Chasing individual stocks at your own risk - not all stocks are created equal, but there's strength in numbers. US stocks broadly gained 15.2% over the last five years.
As you can see here individual stocks, 66% of the time were positive and 34% of time, they lost money. Conversely comparing the stock mutual funds and ETFs in the last five years, 99.8% of them were positive and had a profit and only .2 lost money.
So by chasing individual stocks, as you can see on this chart, 66% of time you will gain money and the other 34% you will lose money because the risk is so high in individual stocks. Comparatively speaking during the same time in the last five years, 99.8% of all mutual funds and ETFs were positive and 0.02 were negative. So by staying invested in ETFs and mutual funds, a basket of well-diversified and well-managed investments, you have a much higher chance of growing your wealth over time.
Hope this information is helpful. Please, remember to go to AristaWealth.com to look at other videos, tools, tips, and resources to help you live your optimal life.