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Cost of investment matters more than picking individual stocks from "summary" of A Random Walk Down Wall Street by Burton Gordon Malkiel
In the world of investing, many people believe that the key to success lies in picking the right stocks at the right time. They spend countless hours analyzing financial statements, studying market trends, and trying to predict which companies will outperform the rest. However, this emphasis on stock selection may be misguided. In reality, the cost of your investment plays a much more significant role in determining your overall returns than the individual stocks you choose. This concept is often overlooked by amateur investors who are drawn in by the allure of picking winning stocks. They fail to realize that even the most promising stock can turn into a losing investment if the cost of buying and selling it eats into their profits. When you buy or sell a stock, you incur transaction costs such as brokerage fees, commissions, and bid-ask spreads. These costs can add up quickly and significantly impact your bottom line. For example, if you pay a 1% commission on every trade you make, you would need to earn at least 1% on each investm...
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