Stock Picking Trap

Talking Real Money - Investing Talk

Don McDonald

Business, Education, Investing, How To

4.2 • 680 Ratings

🗓️ 16 June 2025

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In this episode of Talking Real Money, Don and Tom take aim at one of the most persistent investing mistakes: owning individual stocks. With humor and sharp skepticism, they explore why investors—even those who say they follow the show’s advice—still concentrate wealth in a few companies like Apple, NVIDIA, or their employer’s stock. Referencing Jason Zweig’s Wall Street Journal column and legendary research from Bessembinder, they show how dangerous, emotional, and often delusional this strategy really is. From Washington Mutual to VF Corp, the history of single-stock implosions is long and painful. Plus, they field smart listener questions on business loans, Roth conversions, and hummingbird beak evolution. Yes, really. 0:04 Why owning individual stocks is more like gambling than investing 0:58 Zweig’s column and stories of extreme stock concentration 1:42 Real investors with 30%+ in just a few stocks 3:00 “I only own Apple”—the emotional traps of stock picking 5:02 Washington Mutual: faith in the familiar turns to loss 6:44 The VF Corp disaster and foundations behaving badly 8:43 No one rings a bell before your stock collapses 9:49 Stock picking risks: underperformance and default 10:22 Don’s infamous four-stock “diversified” portfolio (spoiler: zeroed out) 11:48 Emotional attachment to companies vs. logic 12:27 Top justifications for owning individual stocks—and why they’re bogus 13:40 “It’s money I can afford to lose” (No, it’s not.) 14:51 Owning your own business ≠ owning a stock 15:20 Risk in entrepreneurship is different—but still real 16:18 Listener question: Pay cash or borrow to buy a high-return business asset? 18:02 Don and Tom strongly favor using business cash over loans 19:11 Why even 40% returns are no guarantee 20:39 Hummingbirds evolve to match human feeders (seriously!) 21:34 Listener Q: Convert old 401(k) from Mutual of America to Roth IRA? 23:20 Why you should probably roll that 401(k) out—fast 23:33 Joke time: The silent P in pterodactyl 24:32 Don’s mental age… remains in the single digits Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

Click on a timestamp to play from that location

0:00.0	Oh, that's my prime delivery.
0:01.6	What, already?
0:02.7	Only one thing can match the buzz of Prime's fast delivery.
0:06.2	And that's the buzz of Prime's entertainment.
0:09.0	What are we watching?
0:09.7	Heads of state, that new action comedy with Idris Elber as the Prime Minister,
0:13.3	John Sina as the president, and Prianka Chopra Jonas,
0:15.9	as their only hope.
0:17.0	It looks like a blast.
0:18.2	From fast delivery to explosive entertainment, it's on Prime. For only
0:23.0	899 a month, join now. Content includes limited ads, subscription or to renews. For more information,
0:28.2	go to amazon.com.uk.U.K. slash Prime.
0:35.0	Reality for a really great future.
0:38.0	We're talking real money.
0:40.7	Way back in the old days when there were just a handful of little stocks out there,
0:46.6	you could build yourself a relatively diversified portfolio by buying one or two stocks
0:53.8	because there just weren't many of them.
0:56.4	But today, you need to get with the darn program, all right?
1:00.2	Quit playing individual stocks.
1:02.2	The world has changed and we've discovered something really interesting.
1:06.0	Buying a single stock is more akin to gambling than it is to investing. It's not even like building
1:14.8	your own business because you have no control over what the stupid company does that underlies
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Don McDonald, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Don McDonald and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.